Moviemaker Michael Moore accuses former partners of irregular accounting practices

Michael Moore rose to fame for his documentaries, like Fahrenheit 9/11, which was released in 2004. As the highest grossing documentary of all time, it brought in $222 million. For his effort, Moore and his company Westside Productions received $20 million of the profits in a 50-50 split with his partners, Bob and Harvey Weinstein.

Now, says Moore, he's taking the Weinstein brothers to court to get at least another $2.7 million, which, he says, is his fair share. According to Moore, his former partners are guilty of "classic Hollywood accounting tricks and financial deception."
 
In an attempt to ferret out the truth, Moore initiated an audit in 2008. The audit, he told reporters, uncovered "highly irregular accounting practices," which he claims were used to divert millions of dollars of profit to the Weinstein brothers. Based on those results, in early February, Moore and Westside Productions filed a lawsuit against the Weinsteins and their company, The Fellowship Adventure Guild (TFAG), in a Los Angeles Superior Court.  
 
Moore's complaint charges the brothers and TFAG with breach of contract, breach of fiduciary responsibility, and constructive fraud. Among other things, Moore alleges that TFAG charged the production for the cost of a private jet to fly one of the Weinsteins to Europe. Moore called the cost of the jet "grossly excessive and unreasonable."
 
Other accusations in Moore's complaint include:
  • The deduction of nearly $500,000 in residuals to several guilds, which, Moore said, appear to not have been actually paid
  • The secret deduction of $2.5 million in revenue which the Weinsteins said was paid to acquire an interest owned in the film by a previous owner, Icon Entertainment International
  • A 7.5 percent override fee on advertising costs of $1.2 million (this in spite of the fact that, Moore said, the Weinsteins didn't incur the costs, and the deal between Westside and TFAG did not allow for the deduction of these costs
  • The improper deduction of fees to distribution consultants, accountants, foreign taxes, and travel expenses
 
"The $2.7 million is just the floor of what we believe is owed. When this goes to discovery I wouldn't be surprised if the amount of what was taken goes much, much higher," Moore's attorney, Larry Stein, said in a statement.
 
While attorney for the Weinsteins, Bert Fields told reporters at FOX411, "Mr. Moore has been paid a huge amount of money and he is not entitled to another dime. He has received every dollar he's entitled to, and his allegations are a lot of hot air, which we will demonstrate to the court. There simply is no merit to any of his claims. They're all just unfounded and bologna. They know that those claims have no merit, and Mr. Moore, for whatever reason, has decided to file this lawsuit. The timing is very suspicious if you think about why one would file a lawsuit against the Weinstein's right at this point. I think they're going to lose and we're going to win."
 
Michael Moore did not comment for FOX411, but a source close to Moore's company said in his defense: "Most films are negative for a long period of time because you have to pay the cost of production, and the cost and interest and overhead, all kinds of things. Then they're exploited in different media, with film, then DVD, and free television and paid television, and they're exploited in different countries at different times, so it takes a considerable period of time before all of that accounting information gets accumulated and reported. I'm sure at the end of the day, they'll find a lot more through discovery. To cast aspersions against Michael for [filing the lawsuit] is ludicrous."
 
As a side note, some Hollywood bloggers have thrown out the speculation that the timing of Moore's lawsuit is "awfully conspicuous," as Harvey Weinstein is currently campaigning to get an Oscar for his film, The King's Speech. With the film gaining ground, some are wondering if Moore is hoping to cause a legal distraction that will destroy Weinstein's chances.
 

Related articles:

You may like these other stories...

As anyone who's ever been through a divorce can attest, the pain of parting with your spouse isn't just emotional—the fallout from divorce can wreak financial havoc as well long after the dust in the courtroom...
Former DOJ Tax Division head Kathryn Keneally joining DLA Piper in New YorkGlobal law firm DLA Piper announced on Thursday that Kathryn Keneally, the former head of the US Justice Department Tax Division, is joining the firm...
OECD calls for coordinated fight against corporate tax avoidanceDavid Jolly of the New York Times reported that dozens of countries with the most advanced economies have agreed on principles for concrete action to prevent...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.