UBS Sued by Producers of 'Bull Durham' and 'Smokey Joe's Cafe' Stage Productions

The companies behind the two productions say they were separately swindled out of a combined $3.5 million by Weathervane Productions and Forrest Capital, respectively, and claim UBS aided and abetted the fraud. Meanwhile, UBS called the suit "frivolous" and said the suggestion it was involved is "completely false."
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Producers of stage adaptations of Bull Durham and Smokey Joe's Cafe say they were conned out of $3.5 million that was being held in accounts at UBS Bank and the financial institution failed to prevent the fraud. 

The companies behind the two productions, Player to be Named Later and Smokey Joe’s Cafe Broadway Revival, are suing UBS Financial Services and its parent Switzerland-based UBS AG Bank. 

In the suit filed Tuesday in New York federal court, the producers' attorney Kevin Galbraith describes a history of "fraudulent, deceptive and unethical conduct" that includes a 2016 finding that UBS was guilty of money laundering in Singapore in connection with the global 1MDB scandal, a $13 million fine in France in 2013, a $1.5 billion settlement in Japan in 2012 and a $780 million settlement with the Department of Justice in 2009 to resolve allegations that it helped Americans evade taxes by sheltering money in secret Swiss accounts.

"[T]he UBS Defendants have a long and plainly demonstrable history of either affirmative unlawful conduct of their own, or grossly negligent conduct in permitting others to utilize their financial services platforms to defraud others," writes Galbraith in the complaint, which is posted in full below. "[D]espite billions in criminal fines, civil penalties and disgorgement orders, they do not appear to have drawn any meaningful lesson from their prior failures, and are recidivists."

The producers' stories are similar, but happened separately. Player to be Named Later partnered with Weathervane Productions. Meanwhile, Smokey Joe's Cafe Broadway Revival connected with Forrest Capital Partners. UBS was the bank for both.

"Plaintiffs reached separate — but essentially identical — deals with Weathervane and Forrest Capital, wherein Plaintiffs would contribute the initial funds, then Forrest Capital would match those initial contributions on its own behalf and on behalf of Weathervane," writes Galbraith. "In the case of PTBNL, the amount contributed by Plaintiffs was $2.5 million; and in the case of SJC, the amount was $1 million."

Their funding agreements specified that UBS would hold a master account and one authorized signatory for each of the three companies would be named, with all three having to sign off on all transactions. according to the complaint. The producers wired their funds into the account and Weathervane and Forrest Capital were supposed to match the funds.

"Under no circumstances were the funds that had been wired to be used or diverted for any purpose other than to fund the production of the plays," writes Galbraith. "Rather than safeguard the funds, consistent with the Funding Agreement and the brokerage account agreements, Weathervane and Forrest Capital began looting the funds almost immediately."

In fact, the producers claim the day after the $2.5 million for Bull Durham was wired into the account, four outgoing payments were made — including a $60,000 payment to a consulting firm called Capital Keys. They claim it was Capital Keys' principal who pressured a UBS financial adviser to open the accounts. In less than three months, all of the $2.5 million had been spent. They're not sure exactly where the $1 million for Smokey Joe's Cafe went, but they believe it was stolen. In a statement to The Hollywood Reporter, Galbraith adds, "The complaint speaks for itself except to say the partners of each show repatriated all funds as soon as it was understood they were missing and each show proceeded along its own path without interruption.”

In July 2019, Benjamin McConley of Forrest Capital and Jason Van Eman of Weathervane were indicted for fraud. McConley pleaded guilty to one count of conspiracy to commit wire fraud and is awaiting sentencing, and Van Eman pleaded not guilty and is headed for trial in July. 

The producers contend that UBS should have known the two companies and individuals and references to multiple prior civil suits with similar allegations and either "learned of the serial frauds alleged" or "failed to learn of them due to shoddy due diligence." They also contend that the UBS financial adviser who opened the accounts was reluctant and only agreed to do it as a favor to a Capital Keys lobbyist and claim UBS' compliance department kept the accounts open despite red flags indicating money laundering. 

The producers are suing for aiding and abetting fraud, aiding and abetting breach of fiduciary duty, negligence and gross negligence, negligent supervision, breach of fiduciary duty, breach of FINRA Rule 2090 and breach of FINRA Rule 2010. They want their $3.5 million back plus interest and costs and punitive damages. 

UBS on Wednesday sent this statement to THR: “The suggestion that UBS had anything to do with the alleged fraud supposedly perpetrated by a third party on two entities that were not UBS customers is completely false. UBS expects the court will dismiss this frivolous action.”

May 21, 8:20 a.m. Updated with a statement from UBS.