LOS ANGELES (CN) — “Pirates of the Caribbean” star Johnny Depp has sued his former business managers, claiming they cheated him of more than $25 million and threatened to foreclose on his Beverly Hills estate after he fired them.
Depp claims in Superior Court that for more than 16 years Joel and Robert Mandel and their business, The Management Group, or TMG, engaged in “gross mismanagement, and, at times, outright fraud” that cost him “tens of millions of dollars” and forced him to sell “significant assets” to pay off losses and “stabilize [his] financial condition.”
The 46-page lawsuit, filed Friday, includes Depp’s new business manager Edward L. White as a plaintiff, and The Mandel Company and lender First American Title Insurance Co. as additional defendants.
Depp says that with no written contract, the Mandels took a commission of 5 percent of his gross earnings — a total of $28 million — to oversee his legal, business, tax and accounting affairs, but they repeatedly paid his income taxes late, Loaned large suns to his friends without permission and grossly overpaid his entertainment lawyers and security service.
“In essence, TMG treated Mr. Depp’s income as their own, available to either TMG or third parties to draw upon as desired. TMG ignored even a semblance of financial management and caused Mr. Depp’s funds to be expended more quickly than they arrived,” Depp says in the complaint.
Because the Mandels are both attorneys, Depp says he can void the oral contract with them whenever he wishes under California attorney ethics laws regarding contingency fees.
Depp’s lead attorney Matthew Kanny, with Manatt, Phelps & Phillips, did not respond to a request to discuss the case.
Joel Mandel declined to comment but provided a statement from his attorney Michael Kump, with Kinsella Weitzman Iser Kump & Aldisert.
Kump called the lawsuit “a complete fabrication.” He said that far from mismanaging their famous client’s money, the Mandels for 17 years “did everything possible to protect Depp from his irresponsible and profligate spending.”
Playing characters as diverse as John Dillinger, Edward Scissorhands and Willie Wonka, Depp has starred in films that have grossed more than $7 billion worldwide.
Like many movie stars, he turned over his business and financial affairs to knowledgeable advisers. He chose the Mandels in 1999 in part because they promoted themselves as transactional and tax attorneys in addition to being experienced business managers.
Depp “granted TMG broad control over his financial affairs, including access to his bank accounts and the accounts of his business entities and trusts,” the lawsuit states.
Depp claims the attorneys responded with “years of gross mismanagement, self-dealing, and at times, actual fraud, in mishandling Mr. Depp’s affairs.”
The lengthy complaint details a number of examples: for instance, because the Mandels “left Mr. Depp’s taxes in the hands of a CPA in training” and always filed his income taxes late, Depp paid nearly $5.7 million in tax penalties and interest he could have avoided.
It claims that without telling Depp, TMG loaned more than $10 million of his money to close associates or employees, and let most of the loans linger unpaid.
When Depp’s mother was very ill, TMG rented a house at his request to serve as a hospice for her at $35,000 a month. When she improved and moved back to her own home, they forgot to cancel the lease, costing him about $350,000, according to the complaint.
The Mandels paid more than $8 million to an overpriced security company between 2012 and 2015 “whereas a reasonable business manager and financial advisor could have obtained acceptable security services for a fraction of that cost,” Depp says.
Again without giving Depp details, TMG borrowed a total of $22 million from City National Bank on his behalf and another $19 million from a “hard money lender” on poor terms, according to the lawsuit. The Mandels used Depp’s residuals on several of his top-grossing films to make payments on that second loan — but only after taking their commission out of the residuals first, Depp claims.
In 2012, the Mandels defaulted on a $5 million bank loan, then took out a $5 million loan in their own name and loaned the money to Depp to pay off the defaulted loan, according to the complaint. As collateral on their loan to Depp, they took a promissory note and deed of trust on five pieces of property that make up his Beverly Hills residence. The note included a provision “enabling them to declare a default if Mr. Depp ever terminated TMG, regardless of what was in Mr. Depp’s best interests,” the lawsuit states.
Finally, in 2015, Depp’s finances were in such bad shape that the Mandels apparently told him he needed to come up with $25 million quickly and to sell his property in France, which news accounts describe as several buildings comprising a small village.
At that point, Depp says in the lawsuit, he fired TMG and hired new manager White. As a result, he says, the Mandels, “adding insult to injury,” are foreclosing on his home.
In the statement from their attorney Kump, the Mandels put the blame on Depp.
He “faced financial ruin with the impending default on a $5 million bank loan” in December 2012, so they “bailed him out,” Kump said in the statement, which adds that Depp still owed the Mandels most of the money by October 2015, forcing them to foreclose.
“Depp’s lawsuit, filed on the eve of the sale of those properties, is a transparent attempt to derail the foreclosure by concocting and spreading malicious lies about the Mandels,” the attorney wrote. “His tactics and lawsuit will fail, and he will be forced to pay back the loan as promised.”
Depp seeks an accounting, $25 million, punitive damages and an order undoing the foreclosure, based on claims of professional negligence, breach of fiduciary duty, three counts of fraud, unjust enrichment, wrongful foreclosure and negligent misrepresentation.