- William Sadleir, 66, was arrested by federal agents on Friday in Los Angeles
- He was ousted as CEO of small movie studio Aviron Pictures last fall
- Feds say he pilfered $1.7 million in PPP loans with phony applications
- Sadleir allegedly used the money to pay off credit cards and car loan
- He is also accused of using BlackRock investment to buy Beverly Hills mansion
U.S. prosecutors have charged the recently ousted owner of a Hollywood movie distributor with defrauding a federal coronavirus emergency relief program and a BlackRock investment fund, including to pay for a Beverly Hills mansion and other luxuries.
William Sadleir, 66, was arrested on Friday in Los Angeles after federal prosecutors said he diverted much of the $1.7 million of loans he received on May 1 from the Paycheck Protection Program for personal expenses.
Prosecutors say he filed a phony loan application with JPMorgan Chase & Co and the Small Business Administration saying the emergency funds were needed for his former company Aviron Group, which had terminated him in December and where he has no current role.
Aviron's films have included Halle Berry's Kidnap, Matthew McConaughey and Anne Hathaway's Serenity, and A Private War starring Rosamund Pike.
The PPP was meant '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,' U.S. Attorney Nick Hanna in Los Angeles said in a statement.
William Sadleir, 66, was arrested on Friday in Los Angeles on federal charges
Sadleir was ousted late last year as CEO of Aviron Pictures, whose credits include Halle Berry's Kidnap and Matthew McConaughey and Anne Hathaway's Serenity
Prosecutors say that Sadleir used the PPP funds to pay off his and his wife's American Express cards and make a $40,000 payment on a car loan.
Sadleir was also accused of having previously induced the closed-end BlackRock Multi-Sector Income Trust Fund to invest $75 million in Aviron to support its films.
Prosecutors said he then created a sham company to divert at least $25 million of the money, and assumed the fake identity 'Amanda Stevens' to communicate by email with the BlackRock fund about its investment.
In a related civil case, the U.S. Securities and Exchange Commission said Sadleir's 'lavish lifestyle' also included a $127,000 Tesla.
In February, the BlackRock executive who approved the $75 million investment in Aviron was fired for conflict of interest after it emerged that the studio had cast his aspiring actress daughter in a movie.
BlackRock exec Randy Robertson (standing left with Sadleir) was fired after approving at $75 million loan to Aviron Studios, which later cast his daughter Rebecca Lee Robertson (right)
Randy Robertson was let go by BlackRock in light of the claims, leaving the fund scrambling to take 'vigorous steps to recover value for shareholders' and 'enhance the level of oversight and due diligence related to these type of transactions'.
According to The Wall Street Journal, Robertson loaned the $75 million sum to Aviron Pictures in 2017. Two years later, the film studio released the romantic drama, After, starring the fund manager's actress daughter, Rebecca Lee Robertson.
At the time of the loan, BlackRock Multi-Sector Income Trust had $750 million in assets, so it appeared 'an unusually aggressive bet' to funnel 10 percent of that sum into Aviron, a 'small, privately held movie company'.
Sadleir told the Journal that Robertson agreed to release $10 million in financing for the romantic drama, After, when he learned that Aviron had finally cast his daughter in a film.
'I can't tell you that he made the decision purely because his daughter was in the movie, but I can tell you BlackRock approved that financing after turning down the opportunity to finance several earlier movies,' Sadleir said.
After, released last year, has a 17 percent rating on Rotten Tomatoes and was panned by Variety as 'an innocuous teen pulp soap opera'.
Sadleir is a former special assistant to President Ronald Reagan and a deputy secretary of state who later moved into the indie movie business.
A lawyer for Sadleir could not immediately be identified. A BlackRock spokesman declined to comment.
The BlackRock fund had $574 million of assets as of May 21, and normally invests most assets in debt and loans. It sued Sadleir for fraud in a New York state court in December.
Sadleir is charged with wire fraud, bank fraud, making false statements to a financial institution, and making false statements to the Small Business Administration.
Sadleir faces up to 82 years in prison if convicted on all charges.