Complexities Multiply for Hollywood Sex Abuse Accuser After Criminal Indictment, Civil Suit (Analysis)

Michael Egan admitted falsely targeting 'Gay Hollywood,' says an amended complaint, but a pending criminal case might — or might not — delay a jury trial on the issue
Chris Godley
Michael Egan and his then-lawyer, Jeff Herman

Michael Egan — who sued X-Men director Bryan Singer and three others earlier this year for 1997-1999 teen sex abuse in Los Angeles and Hawaii, only to drop his suits within months in the face of his own contradictory sworn statements — allegedly told at least one individual before filing suit that his money-making plans included going after "Gay Hollywood" with false claims of abuse and that "God, no," he had never actually been abused.

Those allegations came in an amended complaint filed earlier this month in Hawaii by one of the formerly accused, television executive Garth Ancier, against Egan and his former attorneys for malicious prosecution and abuse of process.

The amended complaint was filed just two days after a federal grand jury in North Carolina indicted Egan for securities fraud and wire fraud in connection with a five-year sham investment scheme in which he allegedly forged brokerage account statements and lied about his financial background, assets and purported business relationships. Egan's criminal attorney, Mark Foster, told The Hollywood Reporter that Egan will be pleading not guilty.

As the defendant in two legal matters, "any way you look at it, [Egan's] got double trouble," said Loyola Law School professor Laurie Levenson, a criminal law expert and former federal prosecutor.

But the question now likely bedeviling both Ancier's lawyers and Egan (he's representing himself in the civil suit) and Foster is just how the two cases will affect each other. The interaction may be complex, and two separate factors are at issue: Egan's credibility and whether the civil trial will need to be put on hold pending the outcome of the criminal trial.

The amended complaint references the indictment and attaches a copy. That's not likely to improve Egan's relationship with the federal judge hearing Ancier's suit, John Michael Seabright. In October, the judge admonished Egan "not to lie to me" after Egan falsely claimed in court not to have received assistance with his legal papers. That incident escalated to the point that the judge finally said, "I'm not buying this. I'm a smart guy, I get it, and don't underestimate me." Egan then conceded that a law firm, Irvine's Manly, Stewart & Finaldi, had helped with the papers.

"The one things judges hate is lying," said Levenson. "That's the cardinal sin. You lose your reputation, and it's all downhill from there."

Egan did not respond to a request for comment.

Later, at a December 2 hearing, Seabright characterized Egan's withdrawal of the original sex abuse suits as, "Mr. Ancier came back and said, I wasn't in Hawaii, I wasn't even here. It's a totally made up claim …. And then Mr. Egan says, Oops, time out, I'm going to dismiss this."

The next day, Seabright ruled that the malicious prosecution claim could proceed to a jury trial.

"Based on the allegations contained in the Complaint and the judicially-noticed facts, the court finds that the Complaint plausibly alleges that Defendants dismissed the underlying action because they did not have a basis to bring it in the first place," said the ruling.

But Seabright also held that the abuse of process claim would have to be amended and resubmitted if it were to proceed. The result was the amended complaint filed this month. The defendants — Egan, his former attorney Jeff Herman and local Hawaii counsel Mark Gallagher — now have the opportunity to object to the amendments.

Asked what effect the federal indictment would have on Egan's credibility in the civil case, Los Angeles criminal defense attorney Larry Bakman said, "Egan's credibility is terminally ill. He should be writing the obituary."

"Fraud is a crime of moral turpitude and dishonesty," he added.

Levenson agreed. "[Egan's] side has almost no credibility left," she said.

But at least one attorney takes a contrarian view. Vince Finaldi, whose firm was ghostwriting Egan's legal papers until the judge put a stop to it, told THR in an email, "even if the acts alleged against Mr. Egan, which we know nothing about, were true, then it would surely not mean he was not abused. To the contrary, it would corroborate his abuse."

That is, if Egan forged documents and lied about his finances, those falsehoods would demonstrate he was telling the truth about being abused. This is so, said Finaldi, because "abuse victims often times mimic the manipulative traits of their abusers."

It's not clear what "manipulative traits" Finaldi is referring to, other than the sex abuse allegations contained in Egan's own discarded lawsuits. So far as is known, Singer, Ancier and the other two men Egan accused — producer Gary Goddard and television executive David Neuman — have never been accused of fraud or forging financial documents.

Bakman, who is not connected to the case, was surprised by Finaldi's argument that Egan's alleged fraud and forgery would bolster his credibility.

"It's asinine," he said. "I'm certainly not in step with that assessment. Absent empirical evidence, I find it a tough sell."

"It's quite the spin," said Levenson. "That's the polite way of putting it. It's circular reasoning."

Bakman added, "You can have a party with this guy. How can you tell that he's been truthful ever?"

Bakman says the indictment may affect the civil case even more profoundly, by putting it on ice until the criminal matter is resolved, which Bakman estimated could take until the end of 2015. In the civil case, Egan will have the right to assert the Fifth Amendment in response to any deposition questions that would tend to undermine his credibility, and Herman and Gallagher may argue that Egan is a necessary party and/or witness for their own defenses.

"There's a real possibility that the action against all three gets stayed," Bakman said. Egan faces up to 20 years in prison and fines and forfeiture of $5.5 million, although Bakman said the actual maximum depends on the amount of the alleged fraud. Egan's initial court appearance in the criminal case will be January 13, at which time he may be ordered into custody or home confinement. His criminal attorney, Foster, said he thought it unlikely his client would be detained.

Levenson has a different assessment on the issue of stay. "I don't think a stay is likely," she said, since the cases are unrelated. "I don't think the judge has to."

If Seabright doesn't grant a stay, would that be grounds for an appeal? No, said Southwestern Law School's Kelly Strader. "Judges have wide discretion on this issue, so I doubt a denial could be reversible error."

(Full disclosure: this reporter is an adjunct professor at Southwestern Law School.)

In any case, a stay in the civil case won't happen if no one moves for one, and Egan might have to do that himself, since Foster told THR that he (Foster) would not be the one to do so. "I do not represent Egan in the civil matters in Hawaii," he emphasized.

The fact that Egan was indicted is probably inadmissible to the jury, Levenson said, and Foster echoed that, saying, "I fail to see how an unproven indictment would be admissible in a civil trial against Egan. … [T]he indictment itself is evidence of nothing." However, if Egan is convicted (or pleads guilty), if he later testifies in the civil case the conviction can be used to impeach him, i.e., undermine his credibility.

"There are not a lot of great scenarios for Egan," Levenson said.

Meanwhile, Finaldi's firm apparently no longer represents Egan, with Finaldi having told Seabright at the October ghostwriting hearing that the firm would be providing Egan no more assistance because the firm "can't incur that kind of liability."

Egan's allegations — which all four of the formerly accused men deny — have never been tested in court, because Egan withdrew his lawsuits — eight in all, four in Hawaii and four in Los Angeles – after his own prior sworn statements emerged that appeared to contradict the allegations in his suit.

Those statements, which were made in the context of a 2000 sexual abuse suit – brought by Egan and two others – that concerned the same Encino mansion that figures in the 2014 suit but that did not mention the four men Egan accused in 2014, included deposition testimony by Egan that he'd never been to Hawaii and had never been abused by anyone other than the three Internet executives he was suing in 2000, as well as a sworn document declaring that Neuman, in particular, had never abused him.

In addition, Singer, Goddard, Ancier and Neuman had submitted hundreds of pages of declarations and business documents to show that they'd not been in Hawaii on the alleged trips. Egan offered no evidence to support the assertions in the lawsuits.

For his part, attorney turned defendant Herman has credibility issues of his own: he was suspended from practicing law for 18 months by the Florida State Supreme Court for "conduct involving dishonesty [or] deceit" and was barred for life from appearing in an Oregon federal court for having a "credibility problem." Those matters might form the basis for impeaching him, should he testify at trial.

That's assuming, of course, that a trial happens. With Egan an impaired party and the credibility blemishes on Herman's record, Herman's and Gallagher's malpractice insurers may seek to settle the case if the judge doesn't grant a stay. If there is a trial, Egan might end up as the sole remaining defendant, unless he too chose to settle and had the money to do so.

The 2000 suit from which Egan's contradictory statements arose was itself a teen sex abuse case, filed by Egan and two other plaintiffs, Mark Ryan and Alex Burton, against the three occupants of the Encino mansion liable for teen sex abuse that they had allegedly committed. The plaintiffs obtained a default judgment against Marc Collins-Rector (who later pled guilty to unrelated federal teen sex counts) and Chad Shackley. Ryan and Burton dismissed their case against the third defendant, Brock Pierce, while Egan settled with Pierce for what Pierce said was a payment of about $20,000, to cover Egan's lawyer's out of pocket expenses.

That suit by Egan and the others was in turn allegedly inspired by Collins-Rector's willingness to settle a separate, 1999 teen sex lawsuit.

"It's my understanding that they got wind of this and figured out wow, three weeks for a few million dollars, why not," Melvin Berman, a personal chef at the Encino mansion, said in a 2004 deposition. He also said that Egan and Burton offered to give him half of any recovery from the lawsuit if Berman would help them in some unspecified way. Berman added that he didn't believe that Egan and Burton had actually been abused.

Burton, who has changed his name, now takes a dimmer view of Egan, swearing under oath in a 2014 declaration that Egan's 2014 suits were "claims based on lies."

Egan's claims faded from the news after he withdrew his suits, then briefly resurfaced around the screening of Amy Berg's documentary about Hollywood male-on-male teen sex abuse, An Open Secret, in which Egan appears with no mention of his credibility issues. As of November, the film did not have a distributor.

12/30/14, 6:00 p.m. PT Updated with comments from Mark Foster.

Email: jh@jhandel.com

Twitter: @jhandel

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