Two theater production companies are suing UBS, accusing the bank of negligence that permitted fraudsters to allegedly swindle them out of the $3.5 million they had raised to mount two Broadway musicals.
The companies — Player to be Named Later and Smokey Joe’s Café Broadway Revival — accuse UBS of breach of fiduciary duty and negligent supervision among other misconduct, according to a lawsuit filed in federal court in New York this week.
Their dispute with UBS arises out of their troubled efforts to raise funds to stage the theatrical productions of “Bull Durham,” based on the film of the same name, and “Smokey’s Joe’s Café: The Songs of Leiber and Stoller.”
In 2016, the companies reached what they say were separate but nearly identical funding agreements with two purported producers: Benjamin McConley, principal of Forrest Capital Partners, and Jason Van Eman, principal of Weathervane Productions. Player to be Named Later and Smokey Joe’s Café Broadway Revival contributed upfront funds of $2.5 million and $1 million, respectively, according to the lawsuit. Forrest and Weathervane were supposed to match these funds dollar for dollar, according to the lawsuit.
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The production companies’ accounts were held at UBS. Under the terms of funding agreements, the plaintiffs’ wired money was not to be used for any purpose other than to fund the production of the plays, according to the lawsuit. However, the plaintiffs allege that Weathervane and Forrest Capital did exactly that, appropriating the funds for their own use.
For instance, according to the lawsuit, Player to Be Named Later charges the day its $2.5 million deposit was received, on June 17, 2016, four payments went out, including one to McConley’s brother and another, totaling $60,000, to a consulting firm in Washington, D.C.
“It was only after repeated inquiries to UBS personnel that [Player to be Named Later] finally learned that the entire $2.5 million it had entrusted to Weathervane, Forrest Capital and the UBS Defendants was gone,” according to the lawsuit.
The plaintiffs say UBS should have detected the fraud. And, at a minimum, that the fraudster’s allegedly nefarious backgrounds should have raised red flags during the bank’s customer-onboarding process. They also claim that the Washington consulting firm mentioned above was instrumental in convincing the financial advisor overseeing the accounts to keep them open.
The plaintiffs’ complaint also takes pains to itemize UBS’s past legal and regulatory troubles, going back to 2009.
UBS denies the allegations. “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," a spokeswoman said in a statement.
The financial advisor did not respond to a request for comment.
The plaintiffs assert they “repeatedly contacted multiple UBS employees,” including their advisor, about the status of their accounts, but to no avail.
Finally, an assistant to the advisor allegedly told them that “the account structure they had been promised had never been put in place, and that all but a few thousand dollars was gone from the accounts plaintiffs had trusted defendants [UBS] to help safeguard,” according to the lawsuit.
The theater production companies are seeking compensatory damages of at least $3.5 million from UBS, which has not yet filed a reply in court.
“The complaint speaks for itself and we do not have any further comment,”an attorney for the plaintiffs, Kevin Galbraith, said in a statement.
As of March 12, when New York stage scene went dark due to the coronavirus pandemic, neither “Bull Durham” nor the revival of “Smokey’s Joe’s Café” had made it to Broadway.
