TRADECRAFT 101 PART SEVEN: MONEY LAUNDERING THROUGH THE MOTION PICTURE INDUSTRY

 

While the exploitation of the American motion picture industry to launder the proceeds of crime sounds like it might be too high profile to be attractive to laundrymen, it is more common than you think.  Compliance officers are of course aware of the diversion of funds stolen from Malaysia's 1MDB billion dollar wealth find to finance the feature film Wolf of Wall Street, but the use of dirty money to quietly finance independent films, whose investors are often hidden behind shell companies, or are opaque for other reasons, is more common than you think.

While there have been a few indictments appearing in the media, the vast majority of placements of criminal profits in the motion picture industry are successful, resulting in the "investors" quietly receiving a participation in legitimate film profits obtained from box office or cable sales. Although there has been improvement in the industry in recent years, persistent money launderers working for criminal clients have found projects short on capital, and producers willing, or forced to by dire circumstances, to engage in willful blindness in what is a non-financial industry that often needs funding which is not otherwise available.

My personal experience as a laundryman with this subject involved a narcotics trafficking client who had, in his youth, been a field agent for the Smithsonian, finding and recording black blues musicians in the deep South, for a living history project, and became enamoured with the work of the legendary Robert Johnson, whose songs have been recording by several mainstream artists, and who has a sort of cult following among blues aficionados, the client included. 

The client, who had grown up in Hollywood, had acquired the rights to a screenplay of the life of Johnson, which had once been optioned by the Rolling Stones, and wanted to turn it into a major motion picture. We traveled, with an entourage that included the scriptwriter, to California, where we met with two executives of a major film studio, and hammered out the basics of a deal, in their offices on pacific Coast Highway. Having no experience in the field, I had previously visited a retired entertainment lawyer in Florida for guidance in providing legal services in such matters. Of course, given the client's penchant for wretched excess, common to narcotics traffickers, the trip involved a luxury Beverly Hills hotel, and his extended shopping spree on Rodeo Drive, while I was forced to manage the difficult scriptwriter's personality issues.

We returned home, having achieved success, only to learn two weeks later that the two fast-talking and enthusiastic film executives with whom we cut the deal to fund the production with cash and offshore funding, had been caught diverting studio funds to their own personal use, and terminated forthwith, leaving us out in the cold. Stung by the experience, and not wishing to end up in the limelight of what Variety had very publicly exposed, our publicity-shy client abandoned the project. I did see that another studio did make their own version of a feature film that traded on Robert Johnson's work, so the concept was sound.

If my experience with money laundering through the motion picture industry is an indication of how widespread the practice is, then compliance officers should be alert to any and all outside financial arrangements that their bank customers in that field push through their accounts, especially when they are of a non-transparent nature, such as shell companies, and funds from offshore financial centers. Don't let client promises of Opening Night tickets blind you to the realities of money laundering, Mr. Banker. It may not end well.