Hollywood Scam Alert: How to Protect Yourself

Ploys range from simple fraud to complex ID theft, but the red flags are often the same.

The mysterious woman impersonating famous female executives like Amy Pascal and Kathleen Kennedy in order to bilk artists out of thousands of dollars is an especially brazen and sensational instance of swindling in Hollywood, but grift in the town is hardly unusual.

"Most [people in Hollywood] are gamblers and risk-takers," says entertainment attorney David Albert Pierce, whose firm specializes in representing independent filmmakers and film investors. But although the industry's unique combination of lofty ambitions and limited opportunity leaves its members (and hopefuls) especially vulnerable to scams, there are red flags to watch out for and best practices to guard against fraud. 

DON'T Pay for anything upfront

Talent "scouts" who stop people in shopping malls, promising stardom in exchange for hefty portfolio and representation fees, are by now practically a scam cliche, but the "pay-for-play" model manifests in more sophisticated forms as well, such as so-called casting workshops that get struggling actors in front of casting directors for a price. "It's payola to meet people," manager Darryl Marshak told THR for a 2016 exposé of the practice.

The First Entertainment Credit Union also commonly sees its members taken by a scheme in which fraudsters advance them a check for a certain amount of money for a job, along with the request for a portion to be refunded in the form of a wire or cash card. "There's usually a story that accompanies the reason that a portion must be returned," says First Entertainment central operations director Sandy Vary, who explains that the original check then bounces and leaves the victim with an unrecoverable deficit in his or her account.

DO Be mindful of timing

It's Friday at 4:45 in the afternoon, and an email arrives requesting payment on an invoice for one of the countless vendors on a project. "You really want to get out of the office, so you just initiate the wire transfer," says certified fraud examiner Becky O'Malley, who adds that she sees companies hit with this scam — called whaling, a form of phishing that targets high-level executives — "all the time."

The solution, O'Malley explains, "can be as simple as picking up the phone" to double-check that the request indeed came from the CFO, or that the invoice was legitimately documented in the internal accounting system with a payable due.

Scammers know to strike when prey are most distracted or feeling the most rushed, which is why most offers come with a sense of urgency to make an immediate decision. "That's always a red flag," says Pierce. "I've never met a legitimate lender more eager to make the loans than the producer is to want the loan. With con men, it's like money's burning a hole in their pocket."

DON'T Be intimidated by belligerence

Performing due diligence is common sense, but freelancers desperate for a big break may be dissuaded from asking too many questions by a party that takes offense at his or her background being questioned. "You often see this shaming: 'How dare you ask for my credentials. Forget it, I'm not going to do your film,' " says Pierce. "The legitimate lenders are never going to be offended. In fact, they'll be glad to work with someone careful with money."

DO Invest in a completion bond

For anyone considering investing in a film, a completion bond is an essential safeguard. The bond is essentially insurance that guarantees a project will be made on time and on budget. "The bond company doesn't want to have to pay out, so they'll have reviewed everything about the film beforehand and [will monitor] the daily and weekly expenditures," says Pierce. If a production can't afford a bond, it's still most prudent to hire an outside accountant "whose whole job is to be suspicious," says Pierce. "Having an extra bean counter to look over everybody's shoulder" goes a long way toward cracking down on redundancies and internal embezzlement.

This story first appeared in the July 11 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.