A Bad Week for ABC

Charges of angelic fraud, a verdict of plagiarism

The probers in the case may not look anywhere near as fetching as Cheryl Ladd, but all Hollywood last week found itself watching an investigation of a possible major fraud involving television's popular Charlie's Angels series. Before the Los Angeles County district attorney were a series of memos and business letters in which a former ABC lawyer reportedly claims that ABC officials and a Hollywood production company participated in a scheme that deprived Screen Stars Natalie Wood and Robert Wagner of more than $500,000 to which the couple were entitled because of their 45% profit rights on Charlie's Angels. If the district attorney eventually brings a case, it will be the first major criminal fraud charge ever filed as a result of the kind of fee accounting practices that, some insiders claim, are too common in the entertainment industry. The allegations were first reported last week by the New York Times in a front-page story that the Los Angeles County district attorney's office describes as accurate.

As the Times told the tale, the damning memos were submitted by Attorney Jennifer Martin, 32, a former ABC lawyer responsible for authorizing the network's payments to the company that produces Charlie's Angels, Spelling-Goldberg Productions, owned by Aaron Spelling and Leonard Goldberg. Last summer Martin noted that the network was being billed a $30,000 "exclusivity" fee for each episode. The exclusivity label was unusual since ABC already had exclusive rights to the series. Moreover, the amount referred to was in addition to the regular fee of $510,000 per show. When Martin inquired further, an unidentified official at Spelling-Goldberg, one of Hollywood's most profitable TV production companies, told her that the breakdown of payments was a ruse to diminish the Wagners' share of the profits. The official also explained to Martin that before the demise of another Spelling-Goldberg program, Starsky and Hutch, $30,000 per episode in Charlie's Angels fees was diverted to the account of the less successful show, in which the Wagners did not have a share.

The memos Martin made of her conversations as she pursued the matter said that when she brought her suspicions to the attention of her superior, ABC Vice President Ronald Sunderland, he gave her the same explanation she had received from the Spelling-Goldberg employee. "They're [doing] the Robert Wagners out of their money," Martin's memo says Sunderland told her. He assured her that no one in the ABC hierarchy would blow the whistle on the arrangement: "Everyone's been told that needs to be told, and they've been told to pay it, and they will pay it." When Martin later went back to Sunderland to restate her misgivings, he chided her for pursuing the issue. Shortly thereafter, she was fired.

The Times expose generated a prompt flurry of denials. ABC said it had paid heed to Martin's questioning, conducted an internal investigation and found no evidence of wrongdoing. The network submitted its conclusions to the Los Angeles County district attorney. Spelling and Goldberg, in a joint statement, denied the fraud: "We are stunned and outraged by the allegations." Wagner, vacationing with his wife in France, said the news of the investigation was "a total surprise."

Last week authorities searched the offices of Spelling-Goldberg and those of its lawyers. "We have not yet determined if this matter will go to the grand jury because there are volumes of documents which must be sorted and examined," said Deputy District Attorney James Ferruzzo.

"If the allegations are true and ABC did all this, it is a bad scandal for the network. This kind of thing is rare," says an official of another network. Others are not so sure. Insiders maintain that the most creative people in the industry are not writers or actors--but accountants. "The definition of net profits is a very nebulous thing," notes one expert. "Creative accounting is a work of art."

There are close links between ABC and Spelling-Goldberg, which produces shows only for that network and created several of the successes (such as Fantasy Island and Hart to Hart) that helped boost ABC out of the basement in the ratings race. Sunderland, for example, once worked with J. William Hayes, Spelling-Goldberg's lawyer and business adviser, who, according to the Times, wrote the letter about exclusivity fees that caught Martin's attention. When the network conducted its inquiry, the Times added, Hayes was asked simply to submit a letter indicating that there was no truth to Martin's charges.

For her part, Martin was letting her memos do the talking; she refused to speak with the press. A former colleague remembers Martin as smart, with a streak of stubbornness. "To me the most interesting part of the story," says the onetime associate, "is that a young lawyer took the responsibility to do this kind of thing. I don't see her getting anything out of it."

ABC had other troubles as well last week: as a result of a federal jury verdict, the network and two co-defendants must pay Writer Harlan Ellison $285,000 for plagiarism of a script about a robot police officer. After Ellison's proposal was rejected, ABC and Co-Defendant Paramount Pictures collaborated on a similar production called Future Cop. The feisty Ellison was aware of the risks of such a suit. "It's a company town," he says. "You blow the whistle and you don't work." Writers, some of whom complain that networks and producers constantly appropriate their ideas, applauded the outcome. Ellison already has made plans to spend part of his award on a billboard overlooking Paramount. It will read, he says, "We caught them with their hand in my pockets. Writers, take heart. Don't let them steal from you."

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