April 20, 2017

Gabrielle Carteris, President

SAG-

AFTRA

5757 Wilshire Boulevard, 7th Floor

Los Angeles, California 90036

David White, Executive Director

SAG-

AFTRA

5757 Wilshire Boulevard, 7th Floor

Los Angeles, California 90036

Re: BREACH OF FIDUCIARY DUTIES

Dear Ms. Carteris and Mr. White:

For five years now, SAG

-AFTRA

has been redefining the method for keeping the members

hip

informed, resorting to communications which are like press rel

eases wherein

information is

managed, intentionally incomplete and misleading. With the recent release of the video

SAG

-

AFTRA Celebrates 5 Years

, this five

-year practice of spin in place of transparency must be

viewed in context of real events and actions prompting many questions that

require immediate

answers from not only yourselves but all union representatives whether elected, appointed or

employed.

Several events have transpired since v

arious members of SAG

-AFTRA utilized the lawsuit

brought before the Honorable Manuel Real to seek transparency within SAG

-AFTRA. In

addition to the untimely passing of Ken Howard, there have been 9th Circuit hearings and

decisions which have condemned the

thievery of members’ monies as well as copyrights, as

well as the federal indictment

of a supervisor in the Residuals Estates and Trust Department who

used the SAG identification number of members to embezzle their residuals.

However, we do not believe that the National Executive Board has been kept informed about

these matters or what our review of more than forty purported Collective Bargaining Agreements

governing the receipt and distribution of f

oreign royalties/foreign levies

has shown. Not only ar

e

the percentage distributions between producers and actors different than the50/50 split which

April 15, 2017

Re: Breach of

Fiduciary Duties

Page 2:

SAG advised the Honorable Margare

t Morrow was occurring, but more importantly, foreign

governments were falsely advised that Uni

on members individually signed Powers of Attorney

which authorized the Union and other entities to take possession of members’ foreign monies,

when no such Powers of Attorney have ever been signed, let alone circulated. And after the

Union failed to provide us its agreement with the Motion Picture Association of America,

claiming there is no such agreement, the MPAA confirmed its existence to

Variety

.

Nor does it appear any actions have been taken to ensure that the executive leadership of SAG

-

AFTRA stop treating the Union’

s Treasury as well as Residuals and Royalties/Levies, if not

Public Performances monies that SAG

-AFTRA has falsely denied receiving, as personal bank

accounts which can be accessed with impunity. The typical safeguards which are utilize

d by

labor organizations to protect their Treasuries do not appear to exist at SAG

-AFTRA, thereby

compromising the

safety of not simply the Union’

s coffers generated from dues, but monies

belonging to actors a

nd actresses, and now, musicians as well. Cont

emporaneously, SAG

-

AFTRA has inappropriately asserted superior rights of ownership of these monies, while also

borrowing from members and non-

members funds which have been deliberately stockpiled to

satisfy the personal pecuniary interests of its hired lea

dership.

Although undersigned would have hoped that the consequence of prior reviews and court

decisions would have resulted in accountability from within, it appears that the exact opposite

has occurred. Rather than file LM

-2s that fully account for resi

duals and royalties belonging

to members and non-

members alike, regression in reporting has occurred instead. The hired

leadership of SAG

-AFTRA has countenanced the prolif

eration of various funds to which

monies belonging to members and non-

member

s alike are now entrusted. What appeared to

be the improper handling of One Hundred and Fifty Million Dollars of monies held in trust is

now approaching at least a Billion Dollars, spread out between internal accounts, as well as

such entities as Sound Exchange, A

FM & SAG

-AFTRA Intellec

tual Property Rights Distribution

Fund, and a recent threat to allow a brand-

new enterprise, Exactuals, to become a part of the

process as well.

The recent announcement that Exactuals will soon be processing residuals and royalties is

disconcerting at best, particularly since SAG

-AFTRA has reported expending millions upgrading

its equipment and software -

presumably, for example, “residuals processing machines” named

Rocky, Bullwinkle, Natasha and Boris -

only to announce now that the solution is in the software

of an outside entity, intending to give Exactuals access to monies that the union has never had

authority to hold and holds only through fraudulent endorsement.

Just as disconcerting is the improper expenditure of Union funds which have lined the

pocketbooks of highly compensated officials of SAG

-AFTRA. Prefatory to commencing a

federal lawsuit to address breaches of fiduciary duties, we are compelled to give the National

Executive Board an opportunity to c

onsider the breaches which have taken place and to timely

redress same, including by demanding that the accused officials and high level executives

reimburse the Union, forthwith. Absent doing so, an action seeking same will in fact be filed.

April 15, 2017

Re: Breach of Fiduciary Duties

Page 3:

The elected Union leadership plays little if any role in scrutinizing the expenditure of

Union funds.

Rather than implement procedures to ensure that i

ts leadership is not improperly ex

pending

members’ dues

, David White approves the expenses of Chief Financial Officer Arianna

Ozzanto while she approves White’s expenses. White approves the expenses of Duncan

Crabtree

-Ireland and John McGuire. McGuire, a senior advisor based in New York, approves

expenses incurred by Robert Hadl, based in Los Angeles, who is reported in LM

-2 filings to

be a

legal consultant

but who is not licensed to practice law. McGu

ire’s “advisor” duties

appear

exclusively to concern how the union can claim

, as its own, foreign monies which are the

property of U.S. Performers, members and non-

members alike. Hadl’s duties appear to include

negotiating bogus collective bargaining

agreements which bargain awa

y members’ rights under

the law.

Notes from internal staff about “lunch bills in which more than half the charges are for alcoholic

beverages” were routinely removed from our review after being brought to the attention of SAG

-

AFTRA legal counsel and the now deceased

National Controller David Metz.

1) Executive Leadership has Misused Union Funds, as follows:

National Executive Director David White

,

who recei

ves a salary well in excess of

a half

million dollars and is no longer licensed to practice law has, since assuming office:

a) Charged SAG

-AFTRA for excessive cell phone usage, including requiring the

Union to pay for, at various times, seven different numbers, including ones

entrusted

to his (White’

s) family members;

b) Ordered and routinely uses Limousines to attend Gala Events, which are stocked by

aged Vodka and other beverages;

c) Used Hotel and Airline Reward Programs for his personal use, while continuing

to bill SAG

-AFTRA for travel and lodging nationally and abroad;

April 15, 2017

Re: Breach of Fiduciary Duties

Page 4:

White continued:

d) Donated purportedly Unclaimed Residuals/Royalties to Not

-for-

Profit

Organizations which have in turn honored David White for his philanthropic

endeavors;

e)

Failed to report to the federal government that, in the months preceding merger, SAG

as well as AFTRA became members of Creative America Campaign,

Inc and in

turn

AFTRA Executive Director Kim Hedgpeth as well as David White became

members of Creative America’

s Board of Directors, in exchange for both

Labor Organizations contributing in excess of $500,000 of union funds to the

entity;

f)

Flown First and Business Class throughout the World to attend Conferences,

without advance approval from the Executive Board, let alone notice to

the membership, while utilizing frequent flier mileage to cover members

of his fam

ily to

accompany him to various foreign

destination

s such

as

Ireland, Belgium

, Beijing, Cuba

and the like;

g) Authorized expenditure of millions of dollars for hotels in New York and

Los Angeles, where non-

members, including relatives

, were provide

d

lodging and were wined and dined at Union expense, and,

h) Routinely had SAG

-AFTRA pay for David White to attend Conferences

at which he served

as a Panelist, enhancing his Resume rather than inuring

to the benefit of t

he Union’

s membership.

General Counsel Duncan Crabtree

-Ireland

, who also receives a substantial salary

and benefits

, has since assuming office:

a) Purchased expensive tickets to events with Union funds and submitted

invoices and obtained reimbursement for same, without obtaining

advance approval for said functions from the National Executive Board;

b) Charged mileage to travel by vehic

le, in lieu of using airlines, or alternative and

less costly travel, including to attend conferences in San Francisco and San

Diego, as well as depositions in California,

c) Used Hotel and Airline Reward Programs for his personal use, while continui

ng

to bill SAG

-AFTRA for travel and lodging nationally and abroad;

April 15, 2017

Re: Breach of Fiduciary Duties

Page 5:

Crabtree

-Ireland continued:

d) Approved the gifting of Unclaimed Residuals/Royalties to Not-

for-

Profit

Organizations

whic

h have in turn honored David White and John McGuire

for their purported philanthropic endeavors;

e) Flown throughout t

he World to attend Conferences without advance approval

from the Executive Board, let alone notice to the membership, while utilizing

frequent flier mileage to cover members of his family to accompany him to

various exotic destinations such as Ireland, Spain, Mexico, China, Argentina,

Cuba and

the like;

f) Routinely submits and has SAG

-AFTRA pay for not only mandatory Bar Dues, but

for Crabtree-

Ireland’s participation in numerous Bar Associations, Copyright,

Patent, Intellectual Property and Pa

rliamentarian Organizations, to enhance

Crabtree

-Ireland’s Personal Resume;

g) Routinely had SAG

-AFTRA pay for Crabtree

-Ireland to attend Conferences at

which he served as a Panelist, enhancing his reputation rather than inuring

to the benefit of the Union’s membership; and

h) Swore under oath as

the Manager of

SAG

-AFTRA Real Property Holdings,

LLC

to affirm

the purchase price of t

he Nashville Local building as

$824,800, even

though under the terms of merger, SAG

-AFTRA already owned said building.

John McGuire,

purportedly as an Advisor, has received substantial remu

neration while

he has

:

a) Been instrumental in causing SAG

-AFTRA to donate Unclaimed Residuals/Royalties

to Not

-for-

Profit Organizations, i.e. Museum of the Moving Image,

so that John

McGuire and others coul

d in turn be honored for their “philanthropic”

endeavors;

b) Fail

ed to recover losses relative to closure of Guild offices in New York;

c) Submitted and been paid expenses for First and Business Class Airfare throughout the

World to attend Conferences

without advance approval from the Executive

Board, let alone notice to the membership, while utilizing for his own benefit all

frequent flier mileage

earned for trips to Ireland, Belgium, Morocco, Beijing and

the like;

April 15, 2017

Re: Breach of Fiduciary Duties

Page 6:

McGuire continued:

d) Submitted expenses for his participation as a Panelist at Conferences, nationally and

i

nternationally, even though such

participation is unnecessary

and does not inure

to the benefit of the Union.

Robert Hadl,

after being accused of not filing reports with the Department of Labor for services

purportedly rendered to SAG

-AFTRA and its predecessors as a Consultant, now

claims h

e is Legal C

ounsel to SAG

-AFTRA, although not licensed to practice law.

Hadl has ch

arged SAG

-AFTRA for:

a) First Class Airfare and upgraded lodging to attend Conferences

throughout

the World, while billing other Unions if not Producers and the Moti

on Picture

Association of America

for the same trips;

b) Utilizing frequent flier mileage and Hotel Rewards earned at the Union's expense

for his own benefit.

c) Routinely submitted and had SAG

-AFTRA pay for Robert Hadl to attend

Conferences on which he was serving as a Panelist.

Considering the above, undersigned conservatively believe that the losses to the Union Treasury

in these regards well exceed $200,000.00 annually, with the total loss easily exceeding several

million dollars. The fa

ct that these inappropriate expenditures have taken place at a time when

Union officials advised the Convention of Delegates that it needed to borrow monies belonging

to the Members, smacks of a blatant disregard of fiduciary duties and inappropriately sou

ght to

enmesh delegates in financial improprieties, without full disclosure let alone transparency since.

Purchase of Buildings:

Since the merger, the Union appears to have used Union Funds, or

monies belonging to the membership, to purchase at least two properties, in Nashville and in

the San Fernando Valley. With respect to Nashville, AFTRA had purchased the building in 1981

but did not report the purchase in federal filings. In 2005, the corporate name of Nashville Local

- AFTRA was changed to Nashville Performers Building Corporation but not reported in federal

filings. Instead, LM

-2 filings showed that AFTRA was a “tenant” of

a real estate firm known as

the NASHVILLE PERFORMERS BUILDING CORPORATION to which it was disbursing

monies. After merger, SAG

-AFTRA continued this fraud for over two and a half years, then in

late 2014 filed SAG

-AFTRA as a foreign nonprofit corporation i

n Tennessee and purchased the

building it already owned, paying itself $824,800. We have ample reason to believe this

transaction was never reported to the Board while shortly thereafter General Counsel Crabtree-

Ireland orchestrated the dissolution of the

Nashville Performers Building Corporation.

April 15, 2017

Re: Breach of Fiduciary Duties

Page 7:

In light hereof, the Board is expected to demand an accounting of and the source of all monies

used in the Nashville real estate transaction, let alone

to e

xplain the source of funds to purchase

,

for $9.68 million, the building in which the AFM

-AFTRA Intellectual Property Distribution

Funds is now located. Undersigned have reason to believe the monies utilized belong to the

members and should never have been utilized to fund excessive salaries let alone vineyard

purchases inuring to the benefit of current and former executive staff, while distributions to the

membership have remained largely dismal instead.

The Board should likewise investigate failures to recover losses associated with closure of Guild

offices, including in but not limited to New York.

Criminal Prosecution:

More than $250,000.00 was stolen in checks issued to Union members.

The National Executive Board must reassure undersigned that these monies have been returned

entirely to the aggrieved Union members, while also compensating Union me

mbers whose

identity was stolen and/or compromised.

Settlement Monies:

During prior meetings with SAG

-AFTRA leadership, it was reported that

SAG-

AFTRA had recovered monies owing to Members in Litigation, including Bankruptcy,

while undersigned are also aw

are that SAG

-AFTRA has purchased rights to movies on which

residuals are owed

. The National Executive Board must reassure undersigned that all monie

s

recovered in these regards have

been restored to aggrieved members and that SAG

-AFTRA, now

assuming the r

ole of Producer, has paid Residuals as well as contributions into the SAG

-AFTRA

Health and Welfare and Pension Funds, notwithstanding the inherent conflict of interest in these

situations.

Exactuals and Related Conflicts Due to Handling of Distributions i

n Past:

Because SAG

-

AFTRA has sent out notice to a select few about the rollout of Exactuals, it is imperative that

you provide greater information so the membership may make an informed decision about the

mechanics of how Exactuals will work, to eliminate

the necessity for seeking injunctive relief.

Direct deposit of wages is allowed under California Labor Code § 213 if the wages are deposited

by the employer into a financial institution of the employee’s choosing. Based upon the limited

announcement whi

ch has been made to some but not all Union members, the wages implicated

herein, namely residuals, will be deposited by the employer into a City National Bank account

and not into the performer’s account. We understand that, thereafter, when there is a deposit of

residuals into a performer’s account, it will be from City National Bank and not the performer’s

employer. And City National Bank will be holding not only unpaid wages in that account but

unpaid royalties from around the globe belonging to audiovis

ual performers and musicians.

Undersigned are concerned because there is a conflict stemming from your former business

interests. The daily operations of your company Entertainment Strategies Group (ESG) were

financed by an account at City National Bank, funded by now imprisoned ex

-lawyer Marc

Dreier

. ESG and City National Bank co

-sponsored industry events. City National Bank is not

April 15, 2017

Re: Breach of Fiduciary Duties

Page 8:

only one of Exactuals’ partners but its lea

d investor. Other partners include the Motion Picture

Association of America (MPAA). The MPAA was a client of ESG, as were others who are now

partners of Exactuals. The model Exactuals has built will save studios a tremendous amount of

time and money

, whic

h you have not disclosed, but the benefit being sold to members is not

what you claim. There will not be direct deposit of wages from studios to performers’ bank

accounts.

The National Executive Board should immediately require an explanation of the sourc

e of

monies and/or securities used to set up Exactuals. If any monies or investments of SAG

-AFTRA

have been used

, then a full accounting should be required, including when those monies were

allocated to support the startup expenses of Exactuals.

By switch

ing to Exactuals, it would appear millions of dollars which have been investe

d at the

direction of the Union’

s executive leadership and high level managers to upgrade and streamline

the processing of residuals and foreign levies/royalties within SAG

-AFTRA will have been

needless

and profligate

acts. Since high level Union officials and managers have expended

millions of dollars for computer upgrades and software over the course of the past several years

it would be appropriate for the Board to require responsible individuals to divulge any famil

y

holdings in the IT entities and software companies which have been utilized.

We would suggest immediate implementation of Disclosure Forms which would obligate staff to

disclose interests held, if any,

including by blood or marriage, in the multiple bus

inesses utilized

to purportedly upgrade computer equipment and software to ensure that a timelier distribution of

residuals and foreign royalties/levies could occur, particularly in light of the millions invested

when storage closets were first discovered holding checks issued to performers. Thereafter, the

Board should review same and demand, if applicable, return of monies where conflicts exist. As

preposterous as this sounds, undersigned are mindf

ul of the recent scandals and prosecution of

key players in entertainment industry ERISA funds.

In light, hereof, the questions we seek answers to are as follows:

a) Is Exactuals bonded and will it be filing reports with the Department of Labor

relative to all monies entrusted to it by SAG

-AFTRA and presum

ably

various Producers

?

b) Which Producers, if any, ha

ve entered into Agreements that

will allow Exactuals

to obtain possession of residuals (wages) belonging to members and non-

members

alike?

c) Will SAG

-AFTRA be sending to Exactuals checks payable d

irectly to members or

will the Studios be doing so?

April 15, 2017

Re: Breach of Fiduciary Duties

Page 9:

d) If SAG

-AFTRA will be sending the monies in question to Exactuals, does SAG

-

AFTRA intend to continue depositing the original che

cks into its bank

accounts first, followed by issuance of a SAG

-AFTRA check to Exactuals?

f) How will this arrangement alter the tax rep

orting obligations of Producers?

g) W

ho will be responsible for reporting these monies to the

Industry Funds?

h) If SAG

-AFTRA remains involved in the handling of monies, what surcharges will

it c

ontinue to extract?

i)

How will monies issued by Studios be reunited with heirs of deceased performers?

Formula for Distributions of For

eign Royalties:

When inquiries were previously made by

certain of the undersigned about the percentage formula utilized to distribute foreign royalties,

different stories were proffered

as to how distributions were accomplished. Initially, USAC was

told t

hat distributions were made in equal shares regardless of whether one was a principal or a

background performer, with SAG

-AFTRA counsel claiming this decision was made by the

Board of Directors. However, when it was discovered that on common films amongst

certain of

the undersigned the distribution was not equal, requests for a copy of the Board Minutes were

tendered to SAG

-AFTRA counsel. In light hereof, please confirm the true distribution formula

that has governed these matters and when if at all the B

oard of Directors approved of same.

Hiring of Brad Keenan:

Lastly, with no press release announcing it, there has also been the

recent hiring of Brad Keenan. As the director of the ACTRA (Alliance of Canadian Cinema,

Television and Radio Artists) Perfor

mers’ Rights Society, Keenan was responsible for

overseeing all aspects of that union’s bookkeeping branch but his title at SAG

-AFTRA

inexplicably began as

Contracts Administration and Enforcement

Managing Advisor.

This

has occurred without any disclos

ure that contemporaneously Keenan was the

Chairman of the

Board

of SCAPR (Societies’ Council for the Collective Management of Performers’ Rights) in

Brussels, Belgium. After ten months, and again without notice, his title became

Managing

Advisor

. His decad

es-long history administering foreign funds available to music, film and

television performers remains under

-the

-radar. He is being paid hundreds of thousands of dollars

-- but for what exactly?

Suffice it to say that a failure to promptly provide a respon

se to this letter within the next forty

-

five days, including to answer the questions posed herein will be viewed as a refusal on the

part of the National Executive Board to cure the fiduciary breaches identified and the

potential for egregious abuses in th

e future.

At a time when the membership of SAG

-AFTRA

is gracefully aging, we are most concerned that SAG

-AFTRA has forgotten its role to protect its

members, let alone to ensure that monies which have come into the possession of the Union

April 15, 2017

Re: Breach of Fiduciary Duties

Page 10:

through artifice or misrepresentations are promptly restored to their rightful owners, namely

living members and non

-members alike, let alo

ne their beneficiaries upon one’

s death.

In September 2012, USAC demanded transparency as well as an opportunity to address the

Board. Efforts to speak about these critical matters fell upon deaf ears. Although more than one

year later, in the midst of litigation, SAG

-AFTRA opened some of its books, the activi

ties of its

retained leadershi

p ever since suggest a callous

indifference to what was discovered, let alone

what it means to be a Union governed by federal labor laws, let alone foreign treaties.

Kindly provide your response forthwith, including to our le

gal counsel, the Law Offices of

Helena S. Wise, 1907 W. Burbank, Suite A, Burbank, CA 91506, on or before June 1, 2017.

Fraternally,

BREACH OF FIDUCIARY DUTIES APRIL 20, 2017
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