Sheppard Mullin Accused of Aiding TV Exec’s ‘Ponzi Scheme’

A Burbank entertainment lawyer says he lost millions of dollars in a Ponzi-like scheme that a television executive perpetrated with the help of an estate planning attorney at Sheppard Mullin Richter & Hampton LLP.

The victim of the alleged scheme, Robert Christopher Chatham, filed a $4.3 million lawsuit on Feb. 26 against Sheppard Mullin and D. Matthew Richardson, a partner in the firm’s Orange County and Los Angeles offices.

The complaint says Richardson helped Mary Carole McDonnell-the CEO of a production company that has produced shows such as It Takes a Killer and I Married a Murderer-lie about her family wealth in order to induce Chatham and others to participate in a money-making opportunity that an arbitrator later described as more akin to “a Ponzi scheme than a legitimate investment program.”

Chatham, an attorney himself, said McDonnell was a client of his who approached him in 2013 about an investment opportunity that would provide a “healthy return.”

Chatham said he was reluctant to participate without documentation of McDonnell’s assets. The complaint says Richardson wrote a letter that said McDonnell was “the beneficiary of an irrevocable trust established by her parents many years ago” that was worth “well in excess of $400 million.”

The letter said McDonnell’s share of the trust “exceeds $80 million” and that she would be entitled to a distribution “starting in June 2015.”

The complaint says Chatham relied on those and other statements because Richardson was “a highly experienced attorney” who had represented McDonnell “for over 20 years” and worked for “a large and respected law firm.”

Heiress Apparent? 

The complaint says that by July 2016 McDonnell had defaulted on her outstanding notes and owed Chatham nearly $1.9 million.

Chatham sued seven months later and won a $3.4 million judgment in arbitration, the complaint says.

Chatham said he has yet to see a dime of that money. The complaint says that Chatham’s efforts to enforce the judgment led him to conclude that that McDonnell “does not have, and apparently never had, $80 million or more in assets,” and that she “appears to be insolvent.”

Chatham says his post-judgment collection efforts included an interview in which McDonnell’s nephew said “his family did not have a $400 million trust, or any kind of wealth approaching that amount, and that he did not understand why anyone would make such false representations to Chatham.”

The complaint alleges malpractice, fraud, breach of fiduciary duty, and negligent misrepresentation.

Chatham says Richardson was “fully versed with McDonnell’s scheme, having recommended participation to other persons.”

“At least one of the other participants in McDonnell’s scheme was Richardson’s own personal trainer, who invested with McDonnell at Richardson’s recommendation and lost his life savings,” the complaint says.

The case is Chatham v. Sheppard Mullin Richter & Hampton, LLP , Cal. Super. Ct., BC696006, Complaint 2/26/18.