SEC Obtains Final Judgment Against Former Owner of California Film Distribution Company Charged with Defrauding Publicly Traded Fund
Litigation Release No. 25581 / November 29, 2022
Securities and Exchange Commission v. William Sadleir, No. 1:20-cv-03997 (S.D.N.Y. filed May 22, 2020)
On November 25, 2022, the United States District Court for the Southern District of New York entered a final consent judgment against William Sadleir, the former Beverly Hills owner of a defunct film distribution company accused of defrauding a publicly traded fund out of at least $13.8 million.
The SEC's complaint, filed on May 22, 2020, alleged 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 Sadleir founded, owned, and operated. The complaint alleged 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 additional 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. In a parallel action, the U.S. Attorney's Office for the Southern District of New York filed criminal charges against Sadleir in connection with similar conduct. United States v. William Sadleir, No. 20-cr-0320 (S.D.N.Y. filed May 22, 2020).
On January 19, 2022, Sadleir pled guilty in the criminal matter, and on May 6, 2022, Sadleir consented to a partial judgment in the SEC matter in which he was permanently enjoined from violating 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, and enjoined from participating in the issuance, offer, or sale of any security, except in his own account. The final judgment in the SEC matter orders Sadleir to pay disgorgement of $13,834,239 plus prejudgment interest of $3,979,140 for a total of $17,813,379, which shall be deemed satisfied by the restitution order entered against Sadleir in the criminal case. On September 9, 2022, the court in the criminal case sentenced Sadleir to 72 months in prison and ordered him to pay restitution of $31.6 million. On September 22, 2022, the court further ordered Sadleir to forfeit a Tesla he acquired from his misconduct.
The SEC's investigation was conducted by Salvatore Massa and Brian Fitzpatrick of the Enforcement Division's Asset Management Unit and Kerri L. Palen of the New York Regional Office. Richard Hong, also of the New York Regional Office assisted in the litigation. The investigation was supervised by Andrew Dean of the Asset Management Unit.
The SEC acknowledges the assistance of the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation.