August 16, 2012 4:50pm PT by Eriq Gardner
Top Hollywood Accounting Firm Accused of Negligence Over Sitcom 'Sister, Sister'
The Hollywood accountants whose job it is to uncover financial wrongdoing are now being sued for that themselves.
The producers of the 1990s TV sitcom Sister, Sister have filed a $5 million lawsuit against accounting firm Sills & Gentille and parent Green Hasson & Janks alleging professional negligence.
Since "Hollywood accounting" is perpetually a big issue in town, auditors play an important yet often overshadowed role for such profit participants as producers and actors. In a lawsuit filed Wednesday in Los Angeles Superior Court, Fred Shafferman, Depasse Jones Entertainment, Swany Inc. and Giggling Goose Prods. raise questions about what happened during the seven years taken to explore profit calculations on a show that debuted nearly two decades ago.
Sister, Sister ran on ABC from 1994-95 and the WB from 1995-1999. The 119 episodes of the show about identical twin girls also were syndicated via Paramount Domestic Television and CBS Television Distributors from 1998 forward.
The plaintiffs say that in 2001, they hired the firm that was then called Sills & Adelman to audit the accounting statements from the show. At an early stage, firm partner Michelle Gentille allegedly told the producers that in all likelihood, the audit would reveal somewhere between 10 to 20 percent in underreported income.
Around this time, one of the show's creators, Gary Gilbert, reports having his two profit calculations as writer and executive producer reduced, at which point he called Paramount and Gentille to inquire why.
For the next six years, the plaintiffs say they regularly called to inquire about the status of the audit, and they allegedly were assured that progress was being made, and that the audit could turn up underreported income from "studio bookkeeping" and "creative billing."
Then in 2007, things started getting odd, according to the complaint. At one point, a delay in the audit report was attributed to a "medical situation." The following year, the plaintiffs were purportedly told that it was 85 percent done, a figure that Gilbert found "strange."
By 2009, the work was complete, and the accounting firm purportedly told them that "they hadn't found that much." Gentille also allegedly was willing to waive the portion of her fee that was due.
Gilbert was confused about his reduced share, and the complaint says he called up a CBS executive, who then offered to reimburse Gilbert for the underpayment. Then in the summer of 2010, Gilbert got a letter from Paramount with a "settlement" offer where he could receive a nearly $175,000 check for underpayment, but only if he signed away his right to another audit. He did.
Around that time, seven years after the audit had started, Gilbert's attorney finally got a copy of the accountants' final audit report. It was 29 pages. It included no mention of Paramount's alleged improper calculation of Gilbert's profits. And it included four "open items." This is all according to the lawsuit.
The audit report was passed along to an accountant at another firm -- Rintala, Frasier and Jaenicke -- who is said to have reported that the audit wasn't complete. It was passed along to another auditor at Junico Services, who allegedly spoke about S&A's staffing problems and said that of the hundreds of audits she had seen, this one was the least complete.
Gentille said her firm had no comment about the new lawsuit.
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