SEC v. WILLIAM SADLEIR, No. 1:20-cv-03997, Southern District of New York (May 26, 2020) — Complaint

Andrew Dean
Dugan Bliss
Salvatore Massa
Vincent Hull
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
Brookfield Place
200 Vesey Street, Suite 400
New York, New York 10281-1022
212-336-0971 (Bliss  )
[email protected]
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
-against-
WILLIAM SADLEIR,
Defendant.
COMPLAINT
20 Civ. 3997
JURY TRIAL DEMANDED
Plaintiff Securities and Exchange Commission (“Commission”), for its Complaint against
Defendant William Sadleir (“Defendant” or “Sadleir”), alleges as follows:
SUMMARY
1.This is a securities fraud case in which Sadleir engaged in a longstanding scheme
to misappropriate millions of dollars from a publicly traded investment company known as
BlackRock Multi-Sector Income Trust (“BIT”), using a sham company and forged signatures.
2.Sadleir was the owner and founder of Aviron Group, LLC, which was the parent
of several film distribution and related companies (collectively with parent, “Aviron”).  BIT
invested approximately $75 million net in Aviron’s film distribution business through two notes,
which were securities, issued in 2015 and 2017, respectively.  In 2017, Sadleir fraudulently

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diverted over approximately $25 million to a sham company he owned and operated.  Sadleir
falsely represented to BIT that the sham company was affiliated with a legitimate media
company performing work to market and promote Aviron’s business.  Sadleir also
misappropriated for his personal use at least approximately $13.8 million of BIT’s invested
funds.  Sadleir used the misappropriated money to support his lavish lifestyle, including cash
withdrawals and the purchases of a luxury car and a mansion in Beverly Hills.  Then, in 2019,
Sadleir forged BIT personnel signatures to authorize the release of collateral BIT valued at
approximately $3 million that it had secured to protect its interest in the notes.
VIOLATIONS
3. By virtue of the foregoing conduct and as alleged further herein, Defendant has
violated Section 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)],
Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)],
and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
4. Unless Defendant is  restrained and enjoined, he will engage in the acts, practices,
transactions, and courses of business set forth in this Complaint or in acts, practices, transactions,
and courses of business of similar type and object.
NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT
5. The Commission brings this action pursuant to the authority conferred upon it by
Securities Act Sections 20(b) and 20(d) [15 U.S.C. §§ 77t(b) and 77t(d)] and Exchange Act
Section 21(d) [15 U.S.C. § 78u(d)].
6. The Commission seeks a final judgment: (a) permanently enjoining Defendant
from violating the federal securities laws and rules this Complaint alleges he has violated;
(b) ordering Defendant to disgorge all ill-gotten gains he received as a result of the violations

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alleged here and to pay prejudgment interest thereon; (c) ordering Defendant to pay civil money
penalties pursuant to Securities Act Section 20(d) [15 U.S.C. § 77t(d)] and Exchange Act Section
21(d)(3) [15 U.S.C. § 78u(d)(3)]; (d) permanently prohibiting Defendant from directly or
indirectly, including, but not limited to through any entity he owns or controls, participating in
the issuance, offer, or sale of any security, provided, however, that such injunction shall not
prevent Defendant from purchasing or selling securities for his own personal account; and
(e) ordering any other and further relief the Court may deem just and proper.
JURISDICTION AND VENUE
7. This Court has jurisdiction over this action pursuant to Securities Act Section
22(a) [15 U.S.C. § 77v(a)] and Exchange Act Section 27 [15 U.S.C. § 78aa].
8. Defendants, directly and indirectly, have made use of the means or
instrumentalities of interstate commerce or of the mails in connection with the transactions, acts,
practices, and courses of business alleged herein.
9. Venue lies in this District under Securities Act Section 22(a) [15 U.S.C. § 77v(a)]
and Exchange Act Section 27 [15 U.S.C. § 78aa].  BIT conducts business operations in this
District, is advised by BlackRock Advisors, LLC in this District, is traded on the New York
Stock Exchange in this District, and many of the acts, practices, transactions, and courses of
business involving BIT’s investments in Sadleir’s company Aviron occurred in this District.
DEFENDANT
10. Sadlier, age 66, a resident of Beverly Hills, California, was the founder of Aviron
Group, LLC, a holding company engaged in the film distribution business.  Sadleir owned and
controlled Aviron Group, LLC and its subsidiaries until December 19, 2019, when he was
removed from most of the subsidiaries for defaulting on a BIT note.

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OTHER RELEVANT ENTITIES
11. BIT is a Delaware statutory trust traded on the New York Stock Exchange that
operates as a registered closed-end management investment company and is advised by
BlackRock Advisors, LLC and related entities.  BIT invests in loans and other debt instruments
to generate income.  BIT’s shares are publicly traded and may be purchased by retail investors.
12. Aviron Gro up, LLC is a Delaware limited liability company based in Beverly
Hills, California that is owned and was founded by Sadleir.  Aviron Group, LLC is a holding
company with several subsidiaries engaged in the business of film distribution that were solely
owned and controlled by Sadleir, and in some cases by a trust controlled by Sadleir.  In
approximately December 19, 2019, Sadleir lost control of many of Aviron Group LLC’s
subsidiaries.
13. GroupM Media Services, LLC is a Delaware limited liability company
established by Sadleir in October 2016 that served as a vehicle for Sadleir to misappropriate BIT
funds.  The entity’s name bears a close resemblance to one of the world’s largest advertising
media companies.
FACTS
I.    BIT INVESTS IN SADLEIR’S COMPANY AVIRON
14. From October 2015 until April 2019, BIT invested approximately $75 million net
in Sadleir’s company Aviron through two notes and related agreements.  For Aviron, the purpose
of the notes and related agreements was to raise money to finance Aviron’s efforts to distribute
specific films.  Generally, a film distributor markets films to get them into theaters and onto
streaming services and receives revenue from those sources.  For BIT, the purpose of its
investment was to profit in the form of interest payments and capital appreciation from Aviron

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warrants.
A. The First Note
15. On October 20, 2015 Aviron and BIT entered into the first note, also known as
the credit and security agreement (the “First Note”).  The First Note operated as a secured credit
facility to provide funding to support Aviron’s efforts to distribute specific films and provided
BIT warrants in Aviron.  The First Note had a 15% interest rate.  Under the terms of the First
Note, all principal and interest were due in one year, and Aviron was required to make quarterly
interest payments.  The First Note contained a number of restrictions on Aviron’s use of the BIT
proceeds including a prohibition against engaging in affiliate transactions.  The First Note
provided BIT the option to extend the maturity of the note for an additional four years.  An
extension would have the effect of extending the due date for Aviron to repay the principal.
Aviron’s revenue streams and associated rights to, or property of, the films acted as collateral
under the First Note.  Aviron and Sadleir also could not use the investments for activities
unrelated to film distribution.  The First Note defined any funding provided by BIT as an
“investment.”  As part of the agreement, BIT also obtained warrants it could exercise for LLC
interests in Aviron.  The terms of the warrants allowed BIT to acquire a specified share class of
LLC interests in Aviron.  BIT could acquire the LLC interests for $1,000 per unit.  The number
of units available for exercise was determined by a formula that was derived in part on how
much money BIT invested in Aviron and did not have an expiration.
16. In addition to the collateral identified in the First Note, Sadleir agreed – in a
separate agreement executed the same day as the First Note – to pledge Aviron’s LLC interests
in two subsidiaries “to induce [BIT] to . . . extend credit” to Aviron (the “Pledge”).  In the event
of a default, the First Note and Pledge permitted BIT to acquire Aviron’s interest in the two

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subsidiaries.  Consistent with the First Note and the Pledge, and to protect its interest, BIT filed
UCC liens on all of the collateral from both agreements: the film distribution rights and
properties, as well as the LLC interests of the two Aviron subsidiaries.
17. The First Note provided for an initial investment by BIT of $12 million, which
occurred in October 2015, after which Aviron was required under the First Note to make
additional written representations for any additional investment.  Those representations included
an assurance that the funds would be used in connection with a specified film project and that
Aviron had not defaulted on any of the terms of the First Note.
18. BIT extended the one-year term of the First Note on October 19, 2016 and
ultimately provided $21 million in additional funding for film distribution projects pursuant to
the First Note as extended.  The extension also kept the terms of the Pledge in place.
B. The   Second Note
19. On July 17, 2017 Aviron and BIT entered into the second note, which replaced
the First Note, and was also known as the note purchase and security agreement (the “Second
Note”).  The Second Note increased the total investment amount that BIT made available to
Aviron, up to $75 million.  The Second Note had a term of three years, but provided that BIT
could enter into one or two one-year extensions.  Aviron’s outstanding debt under the First Note
was rolled into the Second Note.  As a result, the $75 million in funding available under the
Second Note included the outstanding balance of the First Note.  The interest rate of the Second
Note varied:  Aviron was required to pay 15% interest on pre-existing debt from the investments
under the First Note, which at that that time totaled approximately $11.6 million.  For new
investments, the interest rate was 5%.  The agreement required Aviron to make quarterly interest
payments and the principal was due by the maturity of the note.  BIT eventually invested

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approximately $50.6 million in new money under the Second Note.
20. The Second Note reiterated that its purpose was to fund Aviron’s efforts to
distribute films.

 As additional collateral for its investments, Aviron granted rights to LLC
interests in additional subsidiaries that were to be established to hold the rights to subsequent
films.

 Contemporaneous with the Second Note, BIT and Sadleir amended the Pledge so that it
remained in effect with respect to the Second Note.  In addition, BIT maintained its rights to the
Aviron warrants from the First Note and extension, and increased the number of Aviron units
available to BIT under the warrants.
21. The Second Note also required Sadleir and Aviron to comply with certain
conditions in order to receive investments unless BIT expressly waived that provision.  For
example, Aviron and Sadleir could not sell collateralized assets for which BIT had effected a lien
pursuant to the First Note, Second Note, and Pledge.  Aviron and Sadleir also could not enter
into affiliated transactions or use the investments for activities unrelated to film distribution.
22. The Second Note, like the First Note, allowed BIT to transfer its interest in the
note to others.  The Second Note incorporated additional language on transferability that
acknowledged that the Second Note was a security under the Securities Act.  In particular, the
Second Note states that it is not registered and that BIT meets the requirements of the “accredited
investor” definition in Rule 501 of Regulation D of the Securities Act for purposes of the
transaction with Aviron.
23. In April 2019, BIT invested $10 million in Aviron under the Second Note to fund
its distribution efforts for a specified film, which was memorialized in two letter agreements (the
“Letter Agreements”) that were executed the prior month.  The Letter Agreements did not
change the terms of the Second Note, but rather supplemented them.  The Letter Agreements

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required repayment of the $10 million in investments within sixty days after the specified film’s
release.  As collateral for the Letter Agreements, Sadleir pledged LLC interests in 11 Aviron
entities: Aviron Group, LLC and ten subsidiaries.
II.   SADLEIR MISAPPROPRIATES BIT ASSETS USING A SHAM COMPANY

24. By no later than October 2016, Sadleir began a scheme to defraud BIT by
fraudulently diverting and misappropriating a portion of its investments.  Sadleir used a
substantial portion of the diverted funds for himself and to support his lavish lifestyle.
A.   Sadleir Uses   GroupM Media Services, LLC to Misappropriate Funds
25. In October 2016, Sadleir formed GroupM Media Services, LLC which he used as
a vehicle to misappropriate BIT funds.  The entity’s name bears a close resemblance to GroupM,
which describes itself as one of the world’s leading media investment companies.  An affiliate
company of GroupM had an ongoing business relationship with Aviron to provide media
services.  Sadleir, either directly or through others at his direction, established a corporate
website for his sham entity purporting to provide media services, obtained a New York phone
number, and obtained an email address for a fictitious individual named Amanda Stevens
purporting to work for the entity.  Through this deceptive conduct and numerous
misrepresentations to BIT, Sadleir intentionally sought to deceive BIT into thinking that GroupM
Media Services, LLC was affiliated with the legitimate company with a similar name and that at
one point had provided similar services to Aviron.
26. Sadleir created fake documents dated as of December 2016, February 2017, and
October 2017, purporting to be invoices directed to his company Aviron, and requesting payment
be made to his sham company GroupM Media Services, LLC for purported marketing credits or
services from a legitimate company affiliated with the real GroupM.  Those purported invoices

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diverted more than $25 million to Sadleir’s sham company and were fraudulent: Sadleir’s
GroupM Media Services, LLC did not provide any marketing credits or services to Aviron.  And
the invoices, which Sadleir signed, falsely represented that they were from “a GroupM
company,” when in fact the fake documents were from Sadleir and directed payment to his sham
company’s bank account.
27. Relying on the fake December 2016 and February 2017 invoices, BIT authorized
Aviron to release funds to GroupM Media Services, LLC.  Aviron appears to have released the
funds reflected in the fake October 2017 invoice without BIT’s prior knowledge or authorization.
Specifically, Sadleir’s fraudulent invoices claimed to support the following payments to GroupM
Media Services, LLC, as described in Table 1:
Table 1: Fraudulent Payments to GroupM Media Services, LLC
As   Reflected In Fake Invoices
Invoice Date Invoice Paid Date Invoice Amount
(Stated and Paid)
December 13, 2016 January 13, 2017
$460,000
February 17, 2017 February 27, 2017
$12.1 million
October 10, 2017 October 16, 2017
$13.5 million

28. The payment BIT authorized in connection with the fake December 2016 invoice
had been previously released from the account of another third party who provided Aviron with
financing.  BIT funds reimbursed Aviron for the payment.  The payment BIT authorized in
connection with the fake February 2017 invoice was paid from an Aviron entity account to
Sadleir’s GroupM Media Services, LLC after receiving proceeds from BIT.  And the payment in
connection with the fake October 2017 invoice was paid to GroupM Media Services, LLC from
an Aviron entity account using at least $9 million from BIT proceeds.

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29. In an effort to further perpetrate and conceal his fraud, Sadleir made several
misrepresentations to BIT concerning his sham company GroupM Media Services, LLC and
these fake invoices.  After Sadleir shared the first GroupM Media Services, LLC invoice with
BIT, on December 22, 2016 Sadleir e-  mailed BIT’s portfolio manager, asked him to authorize
payment, and falsely conveyed that the fake invoice was, in fact, from the real GroupM, which
he described as “the largest advertising media company in the world[.]”  On January 5 and 11,
2017 Sadleir twice again asked BIT’s portfolio manager by e-mail to authorize payment of the
first fake invoice and again conveyed that the payment would go to the real GroupM for media
services work.  These representations were false: the fake invoice fraudulently directed payment
to Sadleir’s GroupM Media Services, LLC, not the real GroupM.  Rather, Sadleir diverted or
misappropriated the funds.
30. Sadleir made similar misrepresentations concerning the February 17, 2017
invoice.  On February 17 and 23, 2017 Sadleir e-mailed BIT personnel requesting payment of the
second fake invoice and again conveyed that the payment would go to the real GroupM for
media services work.  These representations were false for the same reasons: the fake invoice
fraudulently directed payment to Sadleir’s GroupM Media Services, LLC, not the real GroupM.
Rather, Sadleir diverted or misappropriated the funds.
31. Months after the payments were made pursuant to the fake invoices, Sadleir
continued his efforts to conceal his fraud.  On several occasions including on at least June 19,
2018, March 12, 2019, and September 16, 2019, Sadleir or Aviron personnel acting at his
direction e-mailed BIT personnel and conveyed that the payments were made to the real GroupM
and that the real GroupM had provided or would provide in the future certain media services
work to Aviron.  And from at least November 2019 through February 2020, this concealment

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continued with e-mails from the fictitious Amanda Stevens (created by Sadleir) at GroupM
Media Services, LLC, which were sent to BIT or agents of BIT.  These e-mails also falsely
claimed that Aviron had over $27 million in media credits with GroupM.  In fact, the real
GroupM did not have a relationship with Aviron during the time of any of these e-mails and
Aviron did not have any pending credits or services owed from the real GroupM.
32. Sadlier misappropriated at least the majority of funds obtained through his sham
company and used the proceeds for purposes unrelated to film distribution.  Instead, he used
them to fund his lavish lifestyle.  Among other things, Sadleir used the misappropriated funds to:
purchase a $14 million mansion in Beverly Hills (approximately $4 million of the purchase
amount may have been sourced from Aviron-related revenue); spend nearly $3 million to
remodel Aviron’s offices; pay himself and his wife over $350,000; pay $254,000 to settle a legal
dispute; buy a $127,000 Tesla; and spend about $109,000 on home furnishings and remodeling.
33. Sadleir’s deceptive conduct, misrepresentations, and omissions, including as
described herein, were material: a reasonable investor would have wanted to know that his or her
investment and related collateral was being fraudulently diverted and misappropriated.
II.   SADLEIR MISAPPROPRIATES BIT COLLATERAL
34. As described above, Sadleir’s fraudulent diversion and misappropriation of funds
that were intended to benefit the Aviron entities, some of which served as collateral to BIT,
meant that Sadleir was also devaluing BIT’s collateral.  In addition, in approximately July 2019,
Sadleir continued his scheme to misappropriate BIT assets, this time using a new strategy:
forging BIT personnel signatures to fraudulently release liens on Aviron assets, and reselling
those assets to third parties.
35. In March 2019 Sadleir had requested additional funding from BIT for a new film

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distribution project.  Pursuant to the Second Note, Sadleir and BIT entered into the Letter
Agreements that totaled $10 million in proceeds to be made available for such purposes under
that note.  Shortly after the agreements were executed, BIT transferred $10 million to Aviron in
April 2019.
36. To protect its interests in that collateral, BIT filed liens on the specified assets in
Delaware under the Uniform Commercial Code (“UCC”).  BIT filed multiple liens with each one
defining a set of distinct assets—such as the revenue streams and rights to distribute a particular
film.  Under the First Note and Second Note, Aviron and Sadleir could not unilaterally release
the liens, but rather required BIT to consent to such a release.
37. During July 2019, Sadleir drafted at least five fake agreements between BIT and
Aviron for which he forged the signatures of the BIT portfolio manager.  These forged
agreements enabled Sadleir to have fourteen UCC amendments filed to remove BIT’s liens on
Aviron’s film distribution revenue streams.  These amendments further enabled Sadleir to
misappropriate collateral valued by BIT at approximately $3 million that he may have re-sold or
attempted to re-sell to third parties.
38. By October 2019, BIT learned about the unauthorized UCC amendments to the
liens, which led to a confrontation with Sadleir.  In a phone call on November 25, 2019 with BIT
personnel, when confronted about the unauthorized amendments and forgeries, Sadleir admitted
he had “fucked up.”
39. Sadleir’s deceptive conduct, misrepresentations, and omissions, including as
described herein, were material: a reasonable investor would have wanted to know that his or her
investment and related collateral was being fraudulently diverted and misappropriated.

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FIRST CLAIM FOR RELIEF
Violations of Securities Act Section 17(a)

40. The Commission re-alleges and incorporates by reference here the allegations in
paragraphs 1 through 39.
41. Defendant, directly or indirectly, singly or in concert, in the offer or sale of
securities and by the use of the means or instruments of transportation or communication in
interstate commerce or the mails, (1) knowingly or recklessly has employed one or more devices,
schemes or artifices to defraud, (2) knowingly, recklessly, or negligently has obtained money or
property by means of one or more untrue statements of a material fact or omissions of a material
fact necessary in order to make the statements made, in light of the circumstances under which
they were made, not misleading, and/or (3) knowingly, recklessly, or negligently has engaged in
one or more transactions, practices, or courses of business which operated or would operate as a
fraud or deceit upon the purchaser.
42. By reason of the foregoing, Defendant, directly or indirectly, singly or in concert,
has violated and, unless enjoined, will again violate Securities Act Section 17(a) [15 U.S.C.
§ 77q(a)].
SECOND CLAIM FOR RELIEF
Violations of Exchange Act Section 10(b) and Rule 10b-5 Thereunder

43. The Commission re-alleges and incorporates by reference here the allegations in
paragraphs 1 through 39.
44. Defendant, directly or indirectly, singly or in concert, in connection with the
purchase or sale of securities and by the use of means or instrumentalities of interstate
commerce, or the mails, or the facilities of a national securities exchange, knowingly or
recklessly has (i) employed one or more devices, schemes, or artifices to defraud, (ii) made one

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or more untrue statements of a material fact or omitted to state one or more material facts
necessary in order to make the statements made, in light of the circumstances under which they
were made, not misleading, and/or (iii) engaged in one or more acts, practices, or courses of
business which operated or would operate as a fraud or deceit upon other persons.
45. By reason of the foregoing, Defendant, directly or indirectly, singly or in concert,
has violated and, unless enjoined, will again violate Exchange Act Section 10(b) [15 U.S.C.
§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
PRAYER FOR RELIEF
 WHEREFORE, the Commission respectfully requests that the Court enter a Final
Judgment:
I.
Permanently enjoining Defendant and his agents, servants, employees and attorneys and
all persons in active concert or participation with any of them from violating, directly or
indirectly, Securities Act Section 17(a) [15 U.S.C. § 77q(a)], Exchange Act Section 10(b) [15
U.S.C. § 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5];
II.
Ordering Defendant to disgorge all ill-gotten gains he received directly or indirectly, with
pre-judgment interest thereon, as a result of the alleged violations;
III.
Ordering Defendant to pay civil monetary penalties under Securities Act Section 20(d)
[15 U.S.C. § 77t(d)] and Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)];
IV.
Permanently prohibiting Defendant from directly or indirectly, including, but not limited

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to through any entity he owns or controls, participating in the issuance, offer, or sale of any
security, provided, however, that such injunction shall not prevent Defendant from purchasing or
selling securities for his own personal account; and
V.
Granting any other and further relief this Court may deem just and proper.

Dated:  New York, New York
May 22, 2020
s/Dugan Bliss__________________________
Andrew Dean
Dugan Bliss
Salvatore Massa
Vincent Hull
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
Brookfield Place
200 Vesey Street, Suite 400
New York, New York 10281-1022
212-336-0971 (Bliss)
[email protected]

Andrew Dean 
Dugan Bliss 
Salvatore Massa 
Vincent Hull 
Attorneys for Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 
New York Regional Office 
Brookfield Place  
200 Vesey Street, Suite 400 
New York, New York 10281-1022 
212-336-0971 (Bliss)
[email protected]

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 

SECURITIES AND EXCHANGE 
COMMISSION, 

Plaintiff, 

-against-

WILLIAM SADLEIR,  

Defendant. 

COMPLAINT 

20 Civ. 3997

JURY TRIAL DEMANDED 

Plaintiff Securities and Exchange Commission (“Commission”), for its Complaint against 

Defendant William Sadleir (“Defendant” or “Sadleir”), alleges as follows: 

SUMMARY 

1. This is a securities fraud case in which Sadleir engaged in a longstanding scheme

to misappropriate millions of dollars from a publicly traded investment company known as 

BlackRock Multi-Sector Income Trust (“BIT”), using a sham company and forged signatures.  

2. Sadleir was the owner and founder of Aviron Group, LLC, which was the parent

of several film distribution and related companies (collectively with parent, “Aviron”).  BIT 

invested approximately $75 million net in Aviron’s film distribution business through two notes, 

which were securities, issued in 2015 and 2017, respectively.  In 2017, Sadleir fraudulently 

Case 1:20-cv-03997   Document 1   Filed 05/22/20   Page 1 of 15



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diverted over approximately $25 million to a sham company he owned and operated.  Sadleir 

falsely represented to BIT that the sham company was affiliated with a legitimate media 

company performing work to market and promote Aviron’s business.  Sadleir also 

misappropriated for his personal use at least approximately $13.8 million of BIT’s invested 

funds.  Sadleir used the misappropriated money to support his lavish lifestyle, including cash 

withdrawals and the purchases of a luxury car and a mansion in Beverly Hills.  Then, in 2019, 

Sadleir forged BIT personnel signatures to authorize the release of collateral BIT valued at 

approximately $3 million that it had secured to protect its interest in the notes. 

VIOLATIONS 

3. By virtue of the foregoing conduct and as alleged further herein, Defendant has 

violated Section 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)], 

Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)], 

and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. 

4. Unless Defendant is restrained and enjoined, he will engage in the acts, practices, 

transactions, and courses of business set forth in this Complaint or in acts, practices, transactions, 

and courses of business of similar type and object.   

NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT 

5. The Commission brings this action pursuant to the authority conferred upon it by 

Securities Act Sections 20(b) and 20(d) [15 U.S.C. §§ 77t(b) and 77t(d)] and Exchange Act 

Section 21(d) [15 U.S.C. § 78u(d)].  

6. The Commission seeks a final judgment: (a) permanently enjoining Defendant 

from violating the federal securities laws and rules this Complaint alleges he has violated; 

(b) ordering Defendant to disgorge all ill-gotten gains he received as a result of the violations 

Case 1:20-cv-03997   Document 1   Filed 05/22/20   Page 2 of 15



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alleged here and to pay prejudgment interest thereon; (c) ordering Defendant to pay civil money 

penalties pursuant to Securities Act Section 20(d) [15 U.S.C. § 77t(d)] and Exchange Act Section 

21(d)(3) [15 U.S.C. § 78u(d)(3)]; (d) permanently prohibiting Defendant from directly or 

indirectly, including, but not limited to through any entity he owns or controls, participating in 

the issuance, offer, or sale of any security, provided, however, that such injunction shall not 

prevent Defendant from purchasing or selling securities for his own personal account; and 

(e) ordering any other and further relief the Court may deem just and proper.  

JURISDICTION AND VENUE 

7. This Court has jurisdiction over this action pursuant to Securities Act Section 

22(a) [15 U.S.C. § 77v(a)] and Exchange Act Section 27 [15 U.S.C. § 78aa].  

8. Defendants, directly and indirectly, have made use of the means or 

instrumentalities of interstate commerce or of the mails in connection with the transactions, acts, 

practices, and courses of business alleged herein. 

9. Venue lies in this District under Securities Act Section 22(a) [15 U.S.C. § 77v(a)] 

and Exchange Act Section 27 [15 U.S.C. § 78aa].  BIT conducts business operations in this 

District, is advised by BlackRock Advisors, LLC in this District, is traded on the New York 

Stock Exchange in this District, and many of the acts, practices, transactions, and courses of 

business involving BIT’s investments in Sadleir’s company Aviron occurred in this District. 

DEFENDANT 

10. Sadlier, age 66, a resident of Beverly Hills, California, was the founder of Aviron 

Group, LLC, a holding company engaged in the film distribution business.  Sadleir owned and 

controlled Aviron Group, LLC and its subsidiaries until December 19, 2019, when he was 

removed from most of the subsidiaries for defaulting on a BIT note. 

Case 1:20-cv-03997   Document 1   Filed 05/22/20   Page 3 of 15



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OTHER RELEVANT ENTITIES 

11. BIT is a Delaware statutory trust traded on the New York Stock Exchange that 

operates as a registered closed-end management investment company and is advised by 

BlackRock Advisors, LLC and related entities.  BIT invests in loans and other debt instruments 

to generate income.  BIT’s shares are publicly traded and may be purchased by retail investors. 

12. Aviron Group, LLC is a Delaware limited liability company based in Beverly 

Hills, California that is owned and was founded by Sadleir.  Aviron Group, LLC is a holding 

company with several subsidiaries engaged in the business of film distribution that were solely 

owned and controlled by Sadleir, and in some cases by a trust controlled by Sadleir.  In 

approximately December 19, 2019, Sadleir lost control of many of Aviron Group LLC’s 

subsidiaries. 

13. GroupM Media Services, LLC is a Delaware limited liability company 

established by Sadleir in October 2016 that served as a vehicle for Sadleir to misappropriate BIT 

funds.  The entity’s name bears a close resemblance to one of the world’s largest advertising 

media companies. 

FACTS 

I. BIT INVESTS IN SADLEIR’S COMPANY AVIRON 

14. From October 2015 until April 2019, BIT invested approximately $75 million net 

in Sadleir’s company Aviron through two notes and related agreements.  For Aviron, the purpose 

of the notes and related agreements was to raise money to finance Aviron’s efforts to distribute 

specific films.  Generally, a film distributor markets films to get them into theaters and onto 

streaming services and receives revenue from those sources.  For BIT, the purpose of its 

investment was to profit in the form of interest payments and capital appreciation from Aviron 

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warrants. 

A. The First Note  

15. On October 20, 2015 Aviron and BIT entered into the first note, also known as 

the credit and security agreement (the “First Note”).  The First Note operated as a secured credit 

facility to provide funding to support Aviron’s efforts to distribute specific films and provided 

BIT warrants in Aviron.  The First Note had a 15% interest rate.  Under the terms of the First 

Note, all principal and interest were due in one year, and Aviron was required to make quarterly 

interest payments.  The First Note contained a number of restrictions on Aviron’s use of the BIT 

proceeds including a prohibition against engaging in affiliate transactions.  The First Note 

provided BIT the option to extend the maturity of the note for an additional four years.  An 

extension would have the effect of extending the due date for Aviron to repay the principal.  

Aviron’s revenue streams and associated rights to, or property of, the films acted as collateral 

under the First Note.  Aviron and Sadleir also could not use the investments for activities 

unrelated to film distribution.  The First Note defined any funding provided by BIT as an 

“investment.”  As part of the agreement, BIT also obtained warrants it could exercise for LLC 

interests in Aviron.  The terms of the warrants allowed BIT to acquire a specified share class of 

LLC interests in Aviron.  BIT could acquire the LLC interests for $1,000 per unit.  The number 

of units available for exercise was determined by a formula that was derived in part on how 

much money BIT invested in Aviron and did not have an expiration. 

16. In addition to the collateral identified in the First Note, Sadleir agreed – in a 

separate agreement executed the same day as the First Note – to pledge Aviron’s LLC interests 

in two subsidiaries “to induce [BIT] to . . . extend credit” to Aviron (the “Pledge”).  In the event 

of a default, the First Note and Pledge permitted BIT to acquire Aviron’s interest in the two 

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subsidiaries.  Consistent with the First Note and the Pledge, and to protect its interest, BIT filed 

UCC liens on all of the collateral from both agreements: the film distribution rights and 

properties, as well as the LLC interests of the two Aviron subsidiaries. 

17. The First Note provided for an initial investment by BIT of $12 million, which 

occurred in October 2015, after which Aviron was required under the First Note to make 

additional written representations for any additional investment.  Those representations included 

an assurance that the funds would be used in connection with a specified film project and that 

Aviron had not defaulted on any of the terms of the First Note.  

18. BIT extended the one-year term of the First Note on October 19, 2016 and 

ultimately provided $21 million in additional funding for film distribution projects pursuant to 

the First Note as extended.  The extension also kept the terms of the Pledge in place.  

B. The Second Note  

19. On July 17, 2017 Aviron and BIT entered into the second note, which replaced 

the First Note, and was also known as the note purchase and security agreement (the “Second 

Note”).  The Second Note increased the total investment amount that BIT made available to 

Aviron, up to $75 million.  The Second Note had a term of three years, but provided that BIT 

could enter into one or two one-year extensions.  Aviron’s outstanding debt under the First Note 

was rolled into the Second Note.  As a result, the $75 million in funding available under the 

Second Note included the outstanding balance of the First Note.  The interest rate of the Second 

Note varied:  Aviron was required to pay 15% interest on pre-existing debt from the investments 

under the First Note, which at that that time totaled approximately $11.6 million.  For new 

investments, the interest rate was 5%.  The agreement required Aviron to make quarterly interest 

payments and the principal was due by the maturity of the note.  BIT eventually invested 

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approximately $50.6 million in new money under the Second Note. 

20. The Second Note reiterated that its purpose was to fund Aviron’s efforts to 

distribute films.  As additional collateral for its investments, Aviron granted rights to LLC 

interests in additional subsidiaries that were to be established to hold the rights to subsequent 

films.  Contemporaneous with the Second Note, BIT and Sadleir amended the Pledge so that it 

remained in effect with respect to the Second Note.  In addition, BIT maintained its rights to the 

Aviron warrants from the First Note and extension, and increased the number of Aviron units 

available to BIT under the warrants. 

21. The Second Note also required Sadleir and Aviron to comply with certain 

conditions in order to receive investments unless BIT expressly waived that provision.  For 

example, Aviron and Sadleir could not sell collateralized assets for which BIT had effected a lien 

pursuant to the First Note, Second Note, and Pledge.  Aviron and Sadleir also could not enter 

into affiliated transactions or use the investments for activities unrelated to film distribution.   

22. The Second Note, like the First Note, allowed BIT to transfer its interest in the 

note to others.  The Second Note incorporated additional language on transferability that 

acknowledged that the Second Note was a security under the Securities Act.  In particular, the 

Second Note states that it is not registered and that BIT meets the requirements of the “accredited 

investor” definition in Rule 501 of Regulation D of the Securities Act for purposes of the 

transaction with Aviron.   

23. In April 2019, BIT invested $10 million in Aviron under the Second Note to fund 

its distribution efforts for a specified film, which was memorialized in two letter agreements (the 

“Letter Agreements”) that were executed the prior month.  The Letter Agreements did not 

change the terms of the Second Note, but rather supplemented them.  The Letter Agreements 

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required repayment of the $10 million in investments within sixty days after the specified film’s 

release.  As collateral for the Letter Agreements, Sadleir pledged LLC interests in 11 Aviron 

entities: Aviron Group, LLC and ten subsidiaries. 

II. SADLEIR MISAPPROPRIATES BIT ASSETS USING A SHAM COMPANY 
 

24. By no later than October 2016, Sadleir began a scheme to defraud BIT by 

fraudulently diverting and misappropriating a portion of its investments.  Sadleir used a 

substantial portion of the diverted funds for himself and to support his lavish lifestyle. 

A. Sadleir Uses GroupM Media Services, LLC to Misappropriate Funds  

25. In October 2016, Sadleir formed GroupM Media Services, LLC which he used as 

a vehicle to misappropriate BIT funds.  The entity’s name bears a close resemblance to GroupM, 

which describes itself as one of the world’s leading media investment companies.  An affiliate 

company of GroupM had an ongoing business relationship with Aviron to provide media 

services.  Sadleir, either directly or through others at his direction, established a corporate 

website for his sham entity purporting to provide media services, obtained a New York phone 

number, and obtained an email address for a fictitious individual named Amanda Stevens 

purporting to work for the entity.  Through this deceptive conduct and numerous 

misrepresentations to BIT, Sadleir intentionally sought to deceive BIT into thinking that GroupM 

Media Services, LLC was affiliated with the legitimate company with a similar name and that at 

one point had provided similar services to Aviron.  

26. Sadleir created fake documents dated as of December 2016, February 2017, and 

October 2017, purporting to be invoices directed to his company Aviron, and requesting payment 

be made to his sham company GroupM Media Services, LLC for purported marketing credits or 

services from a legitimate company affiliated with the real GroupM.  Those purported invoices 

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diverted more than $25 million to Sadleir’s sham company and were fraudulent: Sadleir’s 

GroupM Media Services, LLC did not provide any marketing credits or services to Aviron.  And 

the invoices, which Sadleir signed, falsely represented that they were from “a GroupM 

company,” when in fact the fake documents were from Sadleir and directed payment to his sham 

company’s bank account. 

27. Relying on the fake December 2016 and February 2017 invoices, BIT authorized 

Aviron to release funds to GroupM Media Services, LLC.  Aviron appears to have released the 

funds reflected in the fake October 2017 invoice without BIT’s prior knowledge or authorization.  

Specifically, Sadleir’s fraudulent invoices claimed to support the following payments to GroupM 

Media Services, LLC, as described in Table 1: 

Table 1: Fraudulent Payments to GroupM Media Services, LLC  
As Reflected In Fake Invoices 

Invoice Date Invoice Paid Date Invoice Amount 
(Stated and Paid) 

December 13, 2016 January 13, 2017 $460,000 
February 17, 2017 February 27, 2017 $12.1 million 
October 10, 2017 October 16, 2017 $13.5 million 

 

28. The payment BIT authorized in connection with the fake December 2016 invoice 

had been previously released from the account of another third party who provided Aviron with 

financing.  BIT funds reimbursed Aviron for the payment.  The payment BIT authorized in 

connection with the fake February 2017 invoice was paid from an Aviron entity account to 

Sadleir’s GroupM Media Services, LLC after receiving proceeds from BIT.  And the payment in 

connection with the fake October 2017 invoice was paid to GroupM Media Services, LLC from 

an Aviron entity account using at least $9 million from BIT proceeds. 

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29. In an effort to further perpetrate and conceal his fraud, Sadleir made several 

misrepresentations to BIT concerning his sham company GroupM Media Services, LLC and 

these fake invoices.  After Sadleir shared the first GroupM Media Services, LLC invoice with 

BIT, on December 22, 2016 Sadleir e-mailed BIT’s portfolio manager, asked him to authorize 

payment, and falsely conveyed that the fake invoice was, in fact, from the real GroupM, which 

he described as “the largest advertising media company in the world[.]”  On January 5 and 11, 

2017 Sadleir twice again asked BIT’s portfolio manager by e-mail to authorize payment of the 

first fake invoice and again conveyed that the payment would go to the real GroupM for media 

services work.  These representations were false: the fake invoice fraudulently directed payment 

to Sadleir’s GroupM Media Services, LLC, not the real GroupM.  Rather, Sadleir diverted or 

misappropriated the funds. 

30. Sadleir made similar misrepresentations concerning the February 17, 2017 

invoice.  On February 17 and 23, 2017 Sadleir e-mailed BIT personnel requesting payment of the 

second fake invoice and again conveyed that the payment would go to the real GroupM for 

media services work.  These representations were false for the same reasons: the fake invoice 

fraudulently directed payment to Sadleir’s GroupM Media Services, LLC, not the real GroupM.  

Rather, Sadleir diverted or misappropriated the funds. 

31. Months after the payments were made pursuant to the fake invoices, Sadleir 

continued his efforts to conceal his fraud.  On several occasions including on at least June 19, 

2018, March 12, 2019, and September 16, 2019, Sadleir or Aviron personnel acting at his 

direction e-mailed BIT personnel and conveyed that the payments were made to the real GroupM 

and that the real GroupM had provided or would provide in the future certain media services 

work to Aviron.  And from at least November 2019 through February 2020, this concealment 

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 11 

continued with e-mails from the fictitious Amanda Stevens (created by Sadleir) at GroupM 

Media Services, LLC, which were sent to BIT or agents of BIT.  These e-mails also falsely 

claimed that Aviron had over $27 million in media credits with GroupM.  In fact, the real 

GroupM did not have a relationship with Aviron during the time of any of these e-mails and 

Aviron did not have any pending credits or services owed from the real GroupM. 

32. Sadlier misappropriated at least the majority of funds obtained through his sham 

company and used the proceeds for purposes unrelated to film distribution.  Instead, he used 

them to fund his lavish lifestyle.  Among other things, Sadleir used the misappropriated funds to: 

purchase a $14 million mansion in Beverly Hills (approximately $4 million of the purchase 

amount may have been sourced from Aviron-related revenue); spend nearly $3 million to 

remodel Aviron’s offices; pay himself and his wife over $350,000; pay $254,000 to settle a legal 

dispute; buy a $127,000 Tesla; and spend about $109,000 on home furnishings and remodeling. 

33. Sadleir’s deceptive conduct, misrepresentations, and omissions, including as 

described herein, were material: a reasonable investor would have wanted to know that his or her 

investment and related collateral was being fraudulently diverted and misappropriated. 

II. SADLEIR MISAPPROPRIATES BIT COLLATERAL 

34. As described above, Sadleir’s fraudulent diversion and misappropriation of funds 

that were intended to benefit the Aviron entities, some of which served as collateral to BIT, 

meant that Sadleir was also devaluing BIT’s collateral.  In addition, in approximately July 2019, 

Sadleir continued his scheme to misappropriate BIT assets, this time using a new strategy: 

forging BIT personnel signatures to fraudulently release liens on Aviron assets, and reselling 

those assets to third parties.   

35. In March 2019 Sadleir had requested additional funding from BIT for a new film 

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distribution project.  Pursuant to the Second Note, Sadleir and BIT entered into the Letter 

Agreements that totaled $10 million in proceeds to be made available for such purposes under 

that note.  Shortly after the agreements were executed, BIT transferred $10 million to Aviron in 

April 2019.     

36. To protect its interests in that collateral, BIT filed liens on the specified assets in 

Delaware under the Uniform Commercial Code (“UCC”).  BIT filed multiple liens with each one 

defining a set of distinct assets—such as the revenue streams and rights to distribute a particular 

film.  Under the First Note and Second Note, Aviron and Sadleir could not unilaterally release 

the liens, but rather required BIT to consent to such a release. 

37. During July 2019, Sadleir drafted at least five fake agreements between BIT and 

Aviron for which he forged the signatures of the BIT portfolio manager.  These forged 

agreements enabled Sadleir to have fourteen UCC amendments filed to remove BIT’s liens on 

Aviron’s film distribution revenue streams.  These amendments further enabled Sadleir to 

misappropriate collateral valued by BIT at approximately $3 million that he may have re-sold or 

attempted to re-sell to third parties. 

38. By October 2019, BIT learned about the unauthorized UCC amendments to the 

liens, which led to a confrontation with Sadleir.  In a phone call on November 25, 2019 with BIT 

personnel, when confronted about the unauthorized amendments and forgeries, Sadleir admitted 

he had “fucked up.”   

39. Sadleir’s deceptive conduct, misrepresentations, and omissions, including as 

described herein, were material: a reasonable investor would have wanted to know that his or her 

investment and related collateral was being fraudulently diverted and misappropriated. 

 

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 13 

FIRST CLAIM FOR RELIEF 
Violations of Securities Act Section 17(a) 

 
40. The Commission re-alleges and incorporates by reference here the allegations in 

paragraphs 1 through 39. 

41. Defendant, directly or indirectly, singly or in concert, in the offer or sale of 

securities and by the use of the means or instruments of transportation or communication in 

interstate commerce or the mails, (1) knowingly or recklessly has employed one or more devices, 

schemes or artifices to defraud, (2) knowingly, recklessly, or negligently has obtained money or 

property by means of one or more untrue statements of a material fact or omissions of a material 

fact necessary in order to make the statements made, in light of the circumstances under which 

they were made, not misleading, and/or (3) knowingly, recklessly, or negligently has engaged in 

one or more transactions, practices, or courses of business which operated or would operate as a 

fraud or deceit upon the purchaser. 

42. By reason of the foregoing, Defendant, directly or indirectly, singly or in concert, 

has violated and, unless enjoined, will again violate Securities Act Section 17(a) [15 U.S.C. 

§ 77q(a)]. 

SECOND CLAIM FOR RELIEF 
Violations of Exchange Act Section 10(b) and Rule 10b-5 Thereunder 

 
43. The Commission re-alleges and incorporates by reference here the allegations in 

paragraphs 1 through 39. 

44. Defendant, directly or indirectly, singly or in concert, in connection with the 

purchase or sale of securities and by the use of means or instrumentalities of interstate 

commerce, or the mails, or the facilities of a national securities exchange, knowingly or 

recklessly has (i) employed one or more devices, schemes, or artifices to defraud, (ii) made one 

Case 1:20-cv-03997   Document 1   Filed 05/22/20   Page 13 of 15



 14 

or more untrue statements of a material fact or omitted to state one or more material facts 

necessary in order to make the statements made, in light of the circumstances under which they 

were made, not misleading, and/or (iii) engaged in one or more acts, practices, or courses of 

business which operated or would operate as a fraud or deceit upon other persons. 

45. By reason of the foregoing, Defendant, directly or indirectly, singly or in concert, 

has violated and, unless enjoined, will again violate Exchange Act Section 10(b) [15 U.S.C. 

§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. 

PRAYER FOR RELIEF 

 WHEREFORE, the Commission respectfully requests that the Court enter a Final 

Judgment: 

I. 

Permanently enjoining Defendant and his agents, servants, employees and attorneys and 

all persons in active concert or participation with any of them from violating, directly or 

indirectly, Securities Act Section 17(a) [15 U.S.C. § 77q(a)], Exchange Act Section 10(b) [15 

U.S.C. § 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5];  

II. 

Ordering Defendant to disgorge all ill-gotten gains he received directly or indirectly, with 

pre-judgment interest thereon, as a result of the alleged violations; 

III. 

Ordering Defendant to pay civil monetary penalties under Securities Act Section 20(d) 

[15 U.S.C. § 77t(d)] and Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)];  

IV. 

Permanently prohibiting Defendant from directly or indirectly, including, but not limited 

Case 1:20-cv-03997   Document 1   Filed 05/22/20   Page 14 of 15



 15 

to through any entity he owns or controls, participating in the issuance, offer, or sale of any 

security, provided, however, that such injunction shall not prevent Defendant from purchasing or 

selling securities for his own personal account; and 

V. 

Granting any other and further relief this Court may deem just and proper. 

 
Dated: New York, New York 

May 22, 2020 
s/Dugan Bliss__________________________   
Andrew Dean 
Dugan Bliss 
Salvatore Massa 
Vincent Hull 
Attorneys for Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 
New York Regional Office 
Brookfield Place  
200 Vesey Street, Suite 400 
New York, New York 10281-1022 
212-336-0971 (Bliss) 
[email protected] 

Case 1:20-cv-03997   Document 1   Filed 05/22/20   Page 15 of 15


	Andrew Dean
	Dugan Bliss
	Salvatore Massa
	Vincent Hull
	Attorneys for Plaintiff
	SECURITIES AND EXCHANGE COMMISSION
	New York Regional Office
	Brookfield Place
	200 Vesey Street, Suite 400
	New York, New York 10281-1022
	212-336-0971 (Bliss)
	[email protected]
	Plaintiff Securities and Exchange Commission (“Commission”), for its Complaint against Defendant William Sadleir (“Defendant” or “Sadleir”), alleges as follows:
	SUMMARY
	1. This is a securities fraud case in which Sadleir engaged in a longstanding scheme to misappropriate millions of dollars from a publicly traded investment company known as BlackRock Multi-Sector Income Trust (“BIT”), using a sham company and forged ...
	2. Sadleir was the owner and founder of Aviron Group, LLC, which was the parent of several film distribution and related companies (collectively with parent, “Aviron”).  BIT invested approximately $75 million net in Aviron’s film distribution business...
	VIOLATIONS
	3. By virtue of the foregoing conduct and as alleged further herein, Defendant has violated Section 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)], Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 ...
	4. Unless Defendant is restrained and enjoined, he will engage in the acts, practices, transactions, and courses of business set forth in this Complaint or in acts, practices, transactions, and courses of business of similar type and object.
	NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT
	5. The Commission brings this action pursuant to the authority conferred upon it by Securities Act Sections 20(b) and 20(d) [15 U.S.C. §§ 77t(b) and 77t(d)] and Exchange Act Section 21(d) [15 U.S.C. § 78u(d)].
	6. The Commission seeks a final judgment: (a) permanently enjoining Defendant from violating the federal securities laws and rules this Complaint alleges he has violated; (b) ordering Defendant to disgorge all ill-gotten gains he received as a result ...
	JURISDICTION AND VENUE
	7. This Court has jurisdiction over this action pursuant to Securities Act Section 22(a) [15 U.S.C. § 77v(a)] and Exchange Act Section 27 [15 U.S.C. § 78aa].
	8. Defendants, directly and indirectly, have made use of the means or instrumentalities of interstate commerce or of the mails in connection with the transactions, acts, practices, and courses of business alleged herein.
	9. Venue lies in this District under Securities Act Section 22(a) [15 U.S.C. § 77v(a)] and Exchange Act Section 27 [15 U.S.C. § 78aa].  BIT conducts business operations in this District, is advised by BlackRock Advisors, LLC in this District, is trade...
	DEFENDANT
	10. Sadlier, age 66, a resident of Beverly Hills, California, was the founder of Aviron Group, LLC, a holding company engaged in the film distribution business.  Sadleir owned and controlled Aviron Group, LLC and its subsidiaries until December 19, 20...
	OTHER RELEVANT ENTITIES
	11. BIT is a Delaware statutory trust traded on the New York Stock Exchange that operates as a registered closed-end management investment company and is advised by BlackRock Advisors, LLC and related entities.  BIT invests in loans and other debt ins...
	12. Aviron Group, LLC is a Delaware limited liability company based in Beverly Hills, California that is owned and was founded by Sadleir.  Aviron Group, LLC is a holding company with several subsidiaries engaged in the business of film distribution t...
	13. GroupM Media Services, LLC is a Delaware limited liability company established by Sadleir in October 2016 that served as a vehicle for Sadleir to misappropriate BIT funds.  The entity’s name bears a close resemblance to one of the world’s largest ...
	14. From October 2015 until April 2019, BIT invested approximately $75 million net in Sadleir’s company Aviron through two notes and related agreements.  For Aviron, the purpose of the notes and related agreements was to raise money to finance Aviron’...
	A. The First Note
	15. On October 20, 2015 Aviron and BIT entered into the first note, also known as the credit and security agreement (the “First Note”).  The First Note operated as a secured credit facility to provide funding to support Aviron’s efforts to distribute ...
	16. In addition to the collateral identified in the First Note, Sadleir agreed – in a separate agreement executed the same day as the First Note – to pledge Aviron’s LLC interests in two subsidiaries “to induce [BIT] to . . . extend credit” to Aviron ...
	17. The First Note provided for an initial investment by BIT of $12 million, which occurred in October 2015, after which Aviron was required under the First Note to make additional written representations for any additional investment.  Those represen...
	18. BIT extended the one-year term of the First Note on October 19, 2016 and ultimately provided $21 million in additional funding for film distribution projects pursuant to the First Note as extended.  The extension also kept the terms of the Pledge ...
	B. The Second Note
	19. On July 17, 2017 Aviron and BIT entered into the second note, which replaced the First Note, and was also known as the note purchase and security agreement (the “Second Note”).  The Second Note increased the total investment amount that BIT made a...
	20. The Second Note reiterated that its purpose was to fund Aviron’s efforts to distribute films.  As additional collateral for its investments, Aviron granted rights to LLC interests in additional subsidiaries that were to be established to hold the ...
	21. The Second Note also required Sadleir and Aviron to comply with certain conditions in order to receive investments unless BIT expressly waived that provision.  For example, Aviron and Sadleir could not sell collateralized assets for which BIT had ...
	22. The Second Note, like the First Note, allowed BIT to transfer its interest in the note to others.  The Second Note incorporated additional language on transferability that acknowledged that the Second Note was a security under the Securities Act. ...
	23. In April 2019, BIT invested $10 million in Aviron under the Second Note to fund its distribution efforts for a specified film, which was memorialized in two letter agreements (the “Letter Agreements”) that were executed the prior month.  The Lette...
	II. SADLEIR MISAPPROPRIATES BIT ASSETS USING A SHAM COMPANY
	24. By no later than October 2016, Sadleir began a scheme to defraud BIT by fraudulently diverting and misappropriating a portion of its investments.  Sadleir used a substantial portion of the diverted funds for himself and to support his lavish lifes...
	A. Sadleir Uses GroupM Media Services, LLC to Misappropriate Funds
	25. In October 2016, Sadleir formed GroupM Media Services, LLC which he used as a vehicle to misappropriate BIT funds.  The entity’s name bears a close resemblance to GroupM, which describes itself as one of the world’s leading media investment compan...
	26. Sadleir created fake documents dated as of December 2016, February 2017, and October 2017, purporting to be invoices directed to his company Aviron, and requesting payment be made to his sham company GroupM Media Services, LLC for purported market...
	27. Relying on the fake December 2016 and February 2017 invoices, BIT authorized Aviron to release funds to GroupM Media Services, LLC.  Aviron appears to have released the funds reflected in the fake October 2017 invoice without BIT’s prior knowledge...
	Table 1: Fraudulent Payments to GroupM Media Services, LLC
	As Reflected In Fake Invoices
	28. The payment BIT authorized in connection with the fake December 2016 invoice had been previously released from the account of another third party who provided Aviron with financing.  BIT funds reimbursed Aviron for the payment.  The payment BIT au...
	34. As described above, Sadleir’s fraudulent diversion and misappropriation of funds that were intended to benefit the Aviron entities, some of which served as collateral to BIT, meant that Sadleir was also devaluing BIT’s collateral.  In addition, in...
	35. In March 2019 Sadleir had requested additional funding from BIT for a new film distribution project.  Pursuant to the Second Note, Sadleir and BIT entered into the Letter Agreements that totaled $10 million in proceeds to be made available for suc...
	36. To protect its interests in that collateral, BIT filed liens on the specified assets in Delaware under the Uniform Commercial Code (“UCC”).  BIT filed multiple liens with each one defining a set of distinct assets—such as the revenue streams and r...
	37. During July 2019, Sadleir drafted at least five fake agreements between BIT and Aviron for which he forged the signatures of the BIT portfolio manager.  These forged agreements enabled Sadleir to have fourteen UCC amendments filed to remove BIT’s ...
	38. By October 2019, BIT learned about the unauthorized UCC amendments to the liens, which led to a confrontation with Sadleir.  In a phone call on November 25, 2019 with BIT personnel, when confronted about the unauthorized amendments and forgeries, ...
	39. Sadleir’s deceptive conduct, misrepresentations, and omissions, including as described herein, were material: a reasonable investor would have wanted to know that his or her investment and related collateral was being fraudulently diverted and mis...
	Violations of Securities Act Section 17(a)
	40. The Commission re-alleges and incorporates by reference here the allegations in paragraphs 1 through 39.
	41. Defendant, directly or indirectly, singly or in concert, in the offer or sale of securities and by the use of the means or instruments of transportation or communication in interstate commerce or the mails, (1) knowingly or recklessly has employed...
	42. By reason of the foregoing, Defendant, directly or indirectly, singly or in concert, has violated and, unless enjoined, will again violate Securities Act Section 17(a) [15 U.S.C. § 77q(a)].
	Violations of Exchange Act Section 10(b) and Rule 10b-5 Thereunder
	43. The Commission re-alleges and incorporates by reference here the allegations in paragraphs 1 through 39.
	44. Defendant, directly or indirectly, singly or in concert, in connection with the purchase or sale of securities and by the use of means or instrumentalities of interstate commerce, or the mails, or the facilities of a national securities exchange, ...
	45. By reason of the foregoing, Defendant, directly or indirectly, singly or in concert, has violated and, unless enjoined, will again violate Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
	PRAYER FOR RELIEF
	Dated: New York, New York
	Andrew Dean
	Dugan Bliss
	Salvatore Massa
	Vincent Hull
	Attorneys for Plaintiff
	SECURITIES AND EXCHANGE COMMISSION
	New York Regional Office
	Brookfield Place
	200 Vesey Street, Suite 400
	New York, New York 10281-1022
	[email protected]