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Possible financial impropriety in SAG’s Residuals Estates and Trust Department has led to the discharge of two employees and an outside investigation that may result in a criminal referral.
In a statement today, SAG disclosed the involvement of one employee, a manager. Sources with knowledge of the matter tell The Hollywood Reporter that a second employee was also discharged, not for involvement in the possible crime but for failure to follow guild financial oversight procedures in the matter. The terminations took place in November.
The sources also estimated the amount at issue as $200,000 to $250,000. The possible impropriety was discovered as a result of a routine review, according to the sources.
The guild said it had “moved immediately to investigate and take appropriate action against the employee involved.” The source added that the employee had been placed initially on administrative leave, and subsequently terminated.
According to sources, the investigation is being conducted by forensic accountants from a Big 4 accounting firm. The probe is expected to be completed shortly.
The guild’s funds are protected by theft insurance according to SAG, and the statement emphasized that the coverage would provide “full reimbursement of such funds in the event of an actual loss.” The statement added that “members may rest assured that member funds are not at risk.”
According to a source, SAG has already notified its insurance carrier.
Other potential remedies for the union would presumably include seeking restitution as part of a criminal case, if one is filed, and independently filing a civil suit of its own against the employee. The legal standard for recovery in a civil case is lower than the standard for finding guilt in a criminal proceeding.
The department involved, SAG’s Residuals Estates and Trust Department, is separate from the residuals processing department, and the money involved is part of the Unclaimed Residuals Fund. The estates and trust group deals with such matters as returned checks, unlocatable residuals recipients, and situations involving disputes as to who is entitled to residuals (such as competing claims by a deceased actor’s beneficiaries).
Sources said that the guild would look at opportunities to strengthen its controls in the Estates and Trust Department. According to sources, the guild’s auditors had previously been satisfied with the results of reviews.
Senior guild executives reported the matter to the union’s national board of directors in October, according to the statement.
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