SEC Charges Owner of Film Distribution Company with Defrauding Publicly Traded Fund

Litigation Release No. 24824 / May 26, 2020

Securities and Exchange Commission v. William Sadleir, No. 1:20-cv-03997 (S.D.N.Y. filed May 22, 2020)

On May 22, 2020, the Securities and Exchange Commission charged William Sadleir, the owner of a film distribution company, with defrauding a publicly traded fund of at least $13.8 million.

The SEC's complaint alleges that BlackRock Multi-Sector Income Trust (BIT), a registered closed-end management investment company, invested approximately $75 million in Aviron Group LLC, a film distribution company founded, owned, and operated by Sadleir. The complaint alleges that Sadleir represented that the investments would be used to support the company's distribution of films. Contrary to these representations, Sadleir allegedly used a sham company as a vehicle to fraudulently divert and misappropriate BIT funds and issued fake invoices seeking BIT funds for services that were never provided. Sadleir allegedly used the funds to pay personal expenses, including his purchase, furnishing, and renovation of a Beverly Hills mansion.

The SEC's complaint charges Sadleir with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC seeks disgorgement of ill-gotten gains plus interest, civil penalties, and injunctive relief.

In a parallel action, the U.S. Attorney's Office for the Southern District of New York filed criminal charges against Sadleir.

The SEC's investigation, which is continuing, is being conducted by Salvatore Massa, Vincent T. Hull, and Brian Fitzpatrick of the Asset Management Unit, and Dugan Bliss and Kerri L. Palen of the New York Regional Office. The case was supervised by Andrew Dean of the Asset Management Unit. The SEC's litigation will be led by Mr. Bliss and Mr. Massa.

The SEC appreciates the assistance of the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation.