The legal fallout continues after the shakeups started last June at the film financing company formerly run by Christopher Woodrow. This time it is the one of the biggest investors in Worldview Entertainment taking the once high-flying company that had multi-picture deals with The Weinstein Company and a $5.458 million stake in the Alejandro Gonzalez Inarritu-directed Birdman to court. Sarah Johnson, daughter of the founder of financial services giant Franklin Templeton Investments and San Francisco Giants owner Charles B. Johnson, wants her “nearly $25 million” and more back from the semi-shuttered and now highly litigated company.
“After fraudulently inducing Plaintiff to invest millions of dollars in the Worldview Film Funds, Defendants Cestone, Woodrow, Conners and Morgan, and the corporate entities that they managed, engaged in gross mismanagement and breaches of fiduciary duty,” says a 18-claim lawsuit (read it here) filed in New York Supreme Court by Johnson on March 12. It names co-founder Maria Cestone, the fired former CEO Christopher Woodrow, the current COO Molly Connors and the former CFO Hoyt David Morgan among the defendants.
Having linked up with Worldview in 2011 and been convinced by the principals to sink millions into its funds and slates at various stages over three years with promises of “20% return on investment” and credits like being an EP on Birdman, Johnson is now seeking some very big bucks. According the detailed 38-page complaint, she wants “compensatory damages of at least $20 million, the precise amount to be proven at trial, as well as punitive damages in the amount of at least $50 million, attorney’s fees and costs and a full accounting relating to Plaintiff’s funds.” It’s a far cry from the happier times of late 2013 in this photo (left to right, Cestone, Johnson, Woodrow and Conners) when the plaintiff gained an equity stake in the company: Johnson now slams Worldview’s execs for “shameless dereliction of duty” in running the company and her investments.
Echoing elements of Woodrow and Morgan’s own ongoing legal actions to some degree, Johnson’s lawsuit points to a Worldview culture that seems even more shell game than one has come to expect from an industry that loves to take from Peter to pay Paul. “Among other things, Defendants have entered into (or permitted to be entered into) agreements with the sole objective of taking exorbitant management and/or producer fees from Plaintiff’s sizeable investments and have failed to meet even minimal thresholds of reasonableness in connection with their management of certain film assets, thereby irrevocably damaging Plaintiff’s projected returns,” alleges the complaint.
Johnson’s lawsuit is full of specific details and offer a financial forensics examination of what allegedly was happening at Worldview, For instance, with $2 million in management and production fees being paid out from one Worldview entity to another without Johnson’s knowledge, and Woodrow supposedly telling company lawyers to “disburse escrowed investor funds for his personal use,” the books were a mess. Even more so, the March 12 complaint details, because vital elements of deals on the table weren’t being addressed. “Investors, including Plaintiff, are now projected to lose their entire investment in Devil’s Knot due to Defendants’ lapse in diligence in managing a loan default to a mezzanine lender on the film,” the filing says of the 2013 Atom Egoyan-directed film; Worldview put $4.5 million into it and Johnson served as an executive producer.
The compliant also allegedly reveals how a Worldview entity “wired $6 million as ‘partial funding’ to The Weinstein Company … for the …film Tulip Fever.” The document goes on to say that “upon information and belief, Woodrow authorized this ‘partial funding’ without any requisite legal documentation in place with TWC (thus subjecting WEC II and its investors to significant risk) and against the business advice of Worldview Inc.’s former CFO, Margaret Chu.”
And like a promised $30 million fund that barely hit over half of that target but supposedly used Johnson’s cash like it, there is more in the investor’s lawsuit — like that Johnson even convinced her sister to loan Worldview Inc $1.5 million in August 2012 on the promise that the loan would be repaid by February 2014. It has not been.
“These unlawful actions have tarnished Worldview’s name, alienated investors, and eroded the value of Sarah’s investments,” Johnson’s primary lawyer Orin Snyder of the NYC offices of Gibson Dunn told me. “This lawsuit will hold the defendants accountable for their misconduct.”
Even if Johnson is successful in her jury-seeking complaint, accountability may be a hard-fought battle. Woodrow and Worldview are suing each other, and Morgan is in court against the latter for an allegedly promised EP credit on the Michael Keaton-starring Birdman and the nearly $3 million he invested in the partial financier of the Oscar-winning pic. As a part of that case, a NY Supreme Court judge recently reinforced putting payments from the Fox Searchlight-distributed film on ice while the legal action continues.
Formed in 2007, Worldview may say it remains a self-proclaimed functioning entity with a half a dozen pics in the pipeline. But, having shut down its New York office earlier this month and seeing some filmmakers turn to Kickstarter to finance a project after promised financing dried up, this latest lawsuit has to be a hard blow. The defendants have 20 days to respond to the complaint once they are personally served with the summons.
Johnson hopes to gain her desired funds out of Worldview and Cestone’s interest in future film proceeds from the likes of Birdman, 2011’s Killer Joe, and the Tom Hardy-starrer Child 44 set to be released domestically April 17. Those proceeds might have been more lucrative if Worldview had ended up co-financing more than just one of what was expected to be four TWC films in a five-year co-financing agreement. The Justin Chadwick directed period drama Tulip Fever starring Christoph Waltz, Dane DeHaan and Alicia Vikander is supposed to come out later this year.
Johnson has not given up on the movie biz. She recently co-founded Green Hummingbird Entertainment, a financing and production company centering on provocative director-driven filmmaking.