The ousted chairman of Aviron Pictures was arrested Friday on federal fraud charges for using $1.7 million in the federal government’s coronavirus-relief Paycheck Protection Program funds for his personal use.
William Sadleir was taken into custody without incident by FBI agents and other federal officials, the Department of Justice revealed. He allegedly filed applications for loans under the names of various Aviron entities through JPMorgan Chase – but not for the reasons he stated.
The complaint, which was filed Thursday and unsealed after his arrest, charges Sadleir with wire fraud, bank fraud, making false statements to a financial institution, and making false statements to the Small Business Administration.
Sadleir, 66, of Beverly Hills, is expected to make his initial court appearance today in downtown Los Angeles. The four charges carry a collective maximum statutory penalty of 82 years in federal prison.
According to the affadavit, authorities have linked Sadleir to the three PPP loan applications made on behalf of the three Aviron entities. All three applications claimed each company had 33 employees and monthly payroll expenses of well over $200,000. On April 30, JPMorgan Chase approved the loan applications, and the next day money was wired to nearly-empty JPMorgan Chase bank accounts associated with the three entities.
Within days, nearly $1 million of the PPP loan money was transferred into Sadleir’s personal account at JPMorgan Chase, the affidavit alleges. Investigators have determined that some of this money was used to pay personal expenses, including payments to Sadleir’s and his wife’s American Express cards. One payment allegedly made with PPP loan proceeds – a $40,000 payment on Sadleir’s car loan – was reversed, and JPChase Morgan froze the accounts associated with the alleged scheme.
“This film producer allegedly made a series of misrepresentations to a bank and the Small Business Administration to illegally secure taxpayer money that he then used to fund his nearly empty personal bank account,” said U.S Attorney Nick Hanna on Friday in a statement. “The Paycheck Protection Program was implemented to help small businesses stay afloat during the financial crisis, and we will act swiftly against those who abuse the program for their own personal gain.”
DOJ said Sadleir allegedly obtained the forgivable loans by falsely representing that the funds would be used to support payroll expenses, when, in fact, Sadleir intended to use and did use a significant portion of the funds for personal and non-business-related expenses.
“This defendant allegedly used Paycheck Protection Program loans to pay off his personal credit card debts and other personal expenses, rather than using the funds for legitimate business needs,” added Brian Benczkowski, Assistant Attorney General of the Justice Department’s Criminal Division. “As the department has made clear, those who defraud the PPP to line their own pockets at the expense of the American people will be brought to justice.”
Following a late 2019 lawsuit alleging impropriety in the company structure, Sadlier exited from his role as the operating manager of Aviron Pictures, a subsidiary of Aviron Group, in January of this year. The feds said people associated with Aviron told investigators that Sadleir currently had no role in Aviron Pictures or the related entities. The affidavit notes that Aviron Group, Aviron Licensing and Aviron Releasing are not engaged in any ongoing operations.
Sadleir was pushed out of Aviron Pictures in early January due to a contractual provision given to BlackRock, Aviron’s senior lender. About half of Aviron’s near-30-person staff was let go about three weeks later.
“These [PPP] funds were designed to be a lifeline to businesses struggling to stay afloat during the current crisis,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The FBI is committed to maintaining the integrity of the PPP and will hold accountable those who cheat the system at the expense of American taxpayers.”
The case against Sadleir is being investigated by the FBI and the inspectors general of the SBA and the FDIC.
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