Johnny Depp Sues Business Managers, Accuses Them of Fraud ‘Pirates of the Caribbean’ star alleges Joel and Rob Mandel made unauthorized loans
By Erich Schwartzel, Ben Fritz and Scott Patterson
The Wall Street Journal
Jan. 13, 2017 7:33 p.m. ET
- Subscription service
LOS ANGELES—Johnny Depp first suspected something was amiss when his business managers called to say he was short on funds and needed to sell the small village he owns in France.
The “Pirates of the Caribbean” star until then had paid little attention to how his fortune was handled. But the surprising news set off an investigation that led to a lawsuit filed Friday in which the actor is seeking more than $25 million in damages for alleged fraud and professional negligence.
Mr. Depp alleged in the suit, filed in Los Angeles Superior Court, that brothers Joel and Rob Mandel through their firm, the Management Group, caused him to lose tens of millions of dollars, incur more than $40 million in debt and dispose of significant assets. The actor has earned more than $650 million over the course of his three-decade career, according to a person familiar with the matter.
In a statement, Michael Kump, the Mandels’ attorney, called the lawsuit a complete fabrication and said the managers “did everything possible to protect Depp from his irresponsible and profligate spending.”
Mr. Depp’s complaint alleges that the Mandels lent nearly $10 million to people close to or who worked for the actor without his knowledge, including $7 million to one unnamed individual, “in order to curry favor...thereby consolidating their own position as his advisers.”
The advisers also allegedly made a $5 million loan themselves to Mr. Depp, using five properties in Los Angeles that are his primary residence as collateral. They then failed to make proper repayments on Mr. Depp’s behalf, the complaint states, allowing them to foreclose on the homes.
The Mandels’ attorney said they bailed Mr. Depp out with the loan because the actor faced financial ruin and that the lawsuit is a “transparent attempt to derail the foreclosure by concocting and spreading malicious lies.”
In addition to damages, Mr. Depp is seeking a stay on the foreclosure.
“The lawsuit speaks for itself,” said Adam Waldman, Mr. Depp’s attorney.
The complaint offers a rare behind-the-scenes look at a common dynamic in Hollywood, where actors worth millions focus on their craft and leave financial details to managers who often operate with no formal contracts and little oversight.
Mr. Depp, 53 years old, began his career with 1984’s “A Nightmare on Elm Street,” had lead roles in the series “21 Jump Street” and the film “Edward Scissorhands,” and leapt to superstardom with “Pirates,” the fifth installment of which will be released this summer. Handling the wealth generated by those roles involves managing revenues larger than many private businesses. The public airing of such a famous actor’s private financial arrangements could lead other performers to scrutinize how their own agreements are managed.
Business managers are a staple in Hollywood, charged with making investments and paying bills for wealthy actors and executives. Rates vary, especially when an actor reaches Mr. Depp’s income level. Like many business management firms in Hollywood, The Management Group keeps a low profile and keeps its client list private.
According to the suit, Mr. Depp and the Mandels had no written agreement on how much they would be paid and the brothers’ firm treated Mr. Depp’s income as their own, the lawsuit states.
The Management Firm paid itself more than $28 million, the lawsuit claims. The actor’s taxes were allegedly routinely paid late, resulting in nearly $6 million in penalties, the lawsuit states.
The lawsuit comes as Mr. Depp is embroiled in a separate legal dispute with actress Amber Heard, who filed for divorce 15 months after their February 2015 wedding amid allegations of domestic abuse.
Mr. Depp hired the Mandels in 1999 and employed them until March of last year, soon after they told him he would have to sell a collection of more than a dozen buildings located outside Saint-Tropez. The actor put the French village up for sale in June 2015 for roughly $26 million, and then last July more than doubled the listing price to about $55.5 million, but has yet to sell the property. It has a current listing price of $39 million.
Mr. Depp and his associates were alarmed after hearing he would have to sell the property in France. The complaint says Mr. Depp’s talent agent texted one of the managers: “Did you tell [J]ohnny…he needs to make 25 million by the end of the year????? What are you doing?????”
Johnny Depp Files $25M+ Fraud Lawsuit Against Business Managers Depp fired The Management Group last year and his new business manager discovered serious misconduct, according to the suit.
by Ashley Cullins
The Hollywood Reporter
January 13, 2017 5:00pm PT
Johnny Depp is the latest Hollywood star to claim the people he trusted with his money stole from him, according to a complaint filed Friday in L.A. County Superior Court.
Depp is suing The Management Group, along with two of its attorneys, for negligence, fraud and breach of fiduciary duty, among other claims.
"Mr. Depp is one of the most sought after and highly paid actors in the world," writes attorney Matthew Kanny in the complaint. "He is also the victim of the gross misconduct of his business managers — The Management Group and attorneys Joel and Robert Mandel — who collected tens of millions of dollars of contingent fees, purportedly based on an oral contract, all at Mr. Depp's expense."
Depp is seeking damages of at least $25 million.
Michael Kump, attorney for TMG and the Mandels, issued a statement Friday calling the suit a complete fabrication.
"For 30 years, Joel and Rob Mandel, and their company The Management Group, have been trusted business managers to some of the most successful individuals and companies in the entertainment business,” says Kump. “For 17 of those years, they did everything possible to protect Depp from his irresponsible and profligate spending. In December 2012, Depp faced financial ruin with the impending default on a $5 million bank loan. The Mandels bailed him out by loaning him $5 million, which he promised to repay by January 2014. Although Depp later changed managers, he never alleged any wrong doing. In October 2016, with Depp still owing $4.2 million, the Mandels started non judicial foreclosure proceedings against certain of Depp's properties. Depp's lawsuit, filed on the eve of the sale of those properties, is a transparent attempt to derail the foreclosure by concocting and spreading malicious lies about the Mandels. His tactics and lawsuit will fail, and he will be forced to pay back the loan as promised."
Johnny Depp Slaps His Managers With $25 Million Fraud Lawsuit Actor accuses company of “self-dealing and gross misconduct”
January 13, 2017 @ 5:29 PM
Johnny Depp has stepped out of one legal entanglement and into another.
“Pirates of the Caribbean” star Depp, who finalized his divorce from Amber Heard, filed a fraud lawsuit against The Mandel Company, dba The Management Group, on Friday, claiming more than $25 million in damages.
“Mr. Depp is one of the most sought after and highly paid actors in the world. He is also the victim of the gross misconduct of his business managers — The Management Group and attorney Joel and Robert Mandel — who collected tens of millions of dollars in contingency fees, purportedly based on an oral contract, all at Mr. Depp’s expense,” the complaint, filed in Los Angeles Superior Court, reads. “Like many successful artists who depend upon financial professionals to advise them, Mr. Depp trusted and reasonably relied on TMG to handle his financial and certain legal affairs and to ensure that he and his family would have a financially secure future, built on the foundation of substantial monies Mr. Depp earned through years of hard work.”
“But instead, Mr. Depp lost tens of millions of dollars and has been forced to dispose of significant assets to pay for TMG’s self-dealing and gross misconduct.”
The suit goes on to state, “As a direct and proximate result of TMG’s fraud and concealment, Plaintiffs have been damaged in an amount that has not yet been fully ascertained, but which is believed to be in excess of $25 million.”
According to the suit, Depp agreed to have J. Mandel and R. Mandel handle his new business, legal tax and accounting matters in 1999, “well after Mr. Depp had become a critically acclaimed and enormously successful actor.”
Among the alleged misdeeds: Taking a 5 percent commission of the actor’s income, “in some cases regardless of whether Mr. Depp actually received any income himself or not” — a commission that was “exorbitant, excessive, and far outstripped the actual value of services TMG would be performing for Mr. Depp.”
The suit accuses the firm of imposing the deal on the actor “without negotiation or review of any terms by either Mr. Depp or any independent counsel.”
The suit claims that, while helping itself to more than $28 million in contingency fees, the company “ignored its most basic duties to Mr. Depp by consistently failing to pay his taxes on time causing him to lose over $5,600,000 in penalties and interest in his federal returns alone, failing to properly keep books and records, ‘loaning’ nearly $10 million to third parties without Mr. Depp’s required prior authorization and without proper documentation or requiring repayment, using inflated and obviously incorrect figures as ‘loan’ offsets, falsely ascribing third parties’ taxable income to Mr. Depp so that he, rather tan they, paid the tax, and failing to reduce Mr. Depp’s expenditure or avoid profound financial waste.”
According to the complaint, Depp only learned of the alleged misconduct until only recently, after he terminated his relationship with TMG and hired new management.
Unread postby shaman-art » Sat Jan 14, 2017 3:08 am
I think caused by the divorce he's undergoing some kind of general detox. The divorce might have caused him to take a closer look on everything else that's going on in his life. I picture him sitting on Ibiza during the summer and turning every stone (or have every stone turned). After the summer he looked healthier and relaxed - like somebody who got rid of a lot of dead weight. First AH, then Tracey Jacobs, now the managers. (btw: it makes me wonder if Tracey really was so good for him as we thought during the last years.)
About the money: I understand that from a certain level of income on if you're a not a professional accountant you don't have a chance to keep track of everything. You have to rely on people like the Mandels. The mistake he might have made is not having somebody from the outside monitor them. A bookkeeper can bring a whole company down. I hope his new people gathered enough compelling evidence to resolve this fast and before he is forced to sell more of his assets.
I'm sure this lawsuit will cause other clients of the Mandels to have a closer look at their books. Let's see if someone else comes out of the woodwork. From what is written in the articles it was their job to deal with Johnny's but not to work with Johnny's money on their own behalf. They might have made some bad investments and had trouble to repay everything without being noticed. One of the article stated they "borrowed millions of dollars to survive from movie-to-movie". To me this sounds like some kind of pyramid scheme. Or somebody simply had sticky fingers.
Well. This explains clears up a of of mysteries, like selling the Basquiats. I had pictured Johnny surrounded by loyal, long-term associates who protected him -- guess not. I wonder who among his friends got those "loans" and where Christi fits in, as I would have thought she would be involved with the finances.
According to the timeline, he married Amber after he put Plan de la Tour up for sale and shortly before changing his management company, so maybe he married her thinking he needed someone he could really trust by his side. Turns out that she was one of the worst things that ever happened to him. It's sad that he has had so many blows in such a short time.
I hope this lawsuit ends well for him, and that he has some peace and stability going forward.
shaman-art Thanks for posting the legal document. It is amazing.
I'll buy you the hat....a really big one.
St. Roch -- patron saint of pilgrims