Johnny Depp, Ex-Business Manager Trade Blame for Lost Riches

  • Luxury yacht, French chateau and $30,000 a month for wine
  • Actor seeks $25 million in damages for alleged mismanagement

Johnny Depp

Source: AFP via Getty Images

Hollywood heartthrob Johnny Depp took in hundreds of millions of dollars as Captain Jack Sparrow in Walt Disney Co.’s “Pirates of the Caribbean” franchise and other movies, but not enough to pay for his own swashbuckling lifestyle.

The 54-year-old actor’s financial implosion is at the heart of the lawsuit Depp brought against his former business manager, seeking $25 million in damages for negligence and mismanagement, that provides a rare glimpse into the dealings between megastars and those they entrust with running their business and private life.

In a preliminary skirmish Monday in Los Angeles, Depp’s lawyers persuaded a state judge to narrow counterclaims by the Management Group that the actor is to blame for his financial problems. The management company Depp fired last year alleges the actor repeatedly ignored its warnings that his $2-million-a-month lifestyle, including $30,000 just for wine, wasn’t sustainable.

"When Depp was confronted by TMG or any of his other advisers about his spending, he most often engaged in profanity-laced tirades where he abused the professionals surrounding him and claimed that he would work harder to afford whatever new item he wanted to purchase," the company said in a court filing.

Bahamas Islands

Depp’s purchases included a 45-acre chateau in the South of France, a chain of islands in the Bahamas, a 150-foot luxury yacht, art works by Andy Warhol and Gustav Klimt, 70 collectible guitars, 40 full-time employees around the world and a specially made cannon that he used to blast the ashes of Hunter Thompson over Aspen, Colorado, according to his former business managers.

Depp has argued that the litany of big-ticket purchases is "an improper, retaliatory effort" to publicly attack him and distract from the Management Group’s wrongdoing.

The Beverly Hills-based company, headed by brothers Joel and Robert Mandel, received 5 percent of Depp’s gross income, or about $28 million over 17 years, to manage almost every aspect of his personal and business life, including paying his bills, arranging travel, buying and selling properties, and handling his taxes.

The company had on average four full-time employees working on Depp-related matters and at times as many as 12, the Management Group said.

Unlike the talent agents and entertainment lawyers whose services Hollywood stars rely on, business managers aren’t regulated, which creates a greater risk of conflicts of interest, improper behavior and disputes ending up in court, said Devin McRae, a lawyer with Early Sullivan Wright Gizer & McRae LLP, who has represented celebrities including Shannen Doherty in lawsuits with their business managers.

‘High Earners’

“They pitch themselves to high earners as a one-stop shop that they will do everything for them," McRae said in a phone interview. “So, it’s not uncommon to hear complaints that they didn’t do what they were supposed to do."

In the Depp case, the business manager’s deflection of blame on the client is problematic because it raises the question of whether the company should have represented Depp if it wasn’t able to control him, according to McRae.

"If your client isn’t doing what you’re telling him, maybe it’s time to fire your client," McRae said.

The Management Group wouldn’t drop a long-term client during “his most difficult time,” Michael Kump, a lawyer for the company, said in a statement last week.

“During the 17-year period they represented him, TMG was part of a team of advisers who acted in the very best interests of Depp and helped propel him to superstardom. The idea that Depp would have been better off without TMG is bizarre,” Kump said.

Beyond what Depp paid his business managers, his talent agency took 10 percent from the top of his income and his entertainment lawyer another 5 percent, according to the Management Group. After that he was on the hook for about 50 percent of his income in U.S. and California taxes, leaving a big dent in his hundreds of millions in movie residuals and other income. As a result, Depp was forced to take out loans at increasingly onerous terms to cover his expenses, the company said.

Home Foreclosure

The management company claims that Depp’s lawsuit was prompted by its decision to foreclose on his Los Angeles home. The residence was used as collateral for a $5 million loan the firm made to him in 2012 when City National Bank called in a loan that Depp couldn’t repay. Management Group started foreclosure procedures last year, months after Depp had fired the company and had failed to make payments on the still outstanding loan.

Depp alleges that the company’s failure to pay his taxes on time, its practice of loaning money from him to others, mismanagement of his expenses and “reckless borrowing” on his behalf are the reasons he suffered $25 million in damages. He’s also asking the court to stop the foreclosure of his home.

The Management Group has denied Depp’s allegation.

In a December 2009 email exchange with Joel Mandel included in a court filing, Depp acknowledges his financial predicament but says there’s only so much he can do to rein in his holiday spending, as he needs to give his "kiddies" as good a Christmas as possible, and that taking commercial flights with "paparazzis in tow" instead of flying on private planes would be a nightmare.

The actor said in the email he hoped that his $35 million paycheck for the fourth "Pirates of Caribbean" installment that would be filmed the following year, plus the $20 million he would get for "The Tourist" and another $20 million for "Dark Shadows," will help balance the books.

"What else can I do??? You want me to sell some art??? I will. You want me to sell something else??? Sure ... what???" Depp tells his business manager. "I got bikes, cars, property, paintings and some semblance of a soul left. Where would you like me to start???"

Monday’s Ruling

On Monday, California Superior Court Judge Teresa Beaudet ruled that the Management Group’s itemized list of outrageous spending by Depp is irrelevant to the counterclaims against him for unpaid fees. She also tossed the business manager’s request for a declaration that Depp authorized all the payments made on his behalf, that the company filed his taxes on time, and that the actor is responsible for his own financial waste.

The last claim can be amended and refiled, the judge said after hearing arguments by the Management Group’s attorney. A lawyer for Depp said after the hearing that the claim is meritless.

Beaudet denied Depp’s request to throw out a separate claim against him for promissory fraud -- essentially alleging he had no intention to fulfill his promise to pay some of the company’s management fees.

"Today’s ruling was a clear victory for the Management Group because the court ruled in favor of our fraud claim," Kump said in a statement after the hearing. The attorney also said the company will ask again for the judge to find that Depp brought his troubles on himself. “All of the issues regarding Depp’s extravagant spending continue to be fully included in the case."

The case is Depp v. Mandel Co., BC646882, California Superior Court, County of Los Angeles (Los Angeles).

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