Transactions Tied to Weinstein and AIDS Charity Are Under Investigation

https://www.nytimes.com/2017/11/02/nyregion/harvey-weinstein-amfar.html

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Federal prosecutors in Manhattan have opened a criminal inquiry into transactions arranged by the producer Harvey Weinstein involving $600,000 raised at an AIDS charity auction, according to three people with knowledge of the matter.

The office of the United States attorney for the Southern District of New York is examining whether fraud occurred when the money went to a theater that had staged a musical produced by Mr. Weinstein, said the three people, speaking on the condition of anonymity. The fashion designer Kenneth Cole, chairman of the board at the New York-based AIDS charity, amfAR, said the organization received a subpoena last month.

In September, The New York Times revealed details of the transactions and a civil investigation by the New York State attorney general’s office. Two weeks later, The Times reported sexual harassment and misconduct allegations against Mr. Weinstein, who is now the subject of multiple assault investigations in London, Los Angeles and New York City.

Mr. Weinstein’s spokeswoman, Sallie Hofmeister, did not comment on the inquiry, but released a statement on Thursday saying that “over the course of the last 23 years, Mr. Weinstein has helped raise between $30 million and $40 million for amfAR,” adding that he “has personally pledged $1 million to the organization.”

James Margolin, a spokesman for the United States attorney’s office, declined to comment.

The American Repertory Theater, the Harvard-affiliated nonprofit in Cambridge, Mass., that received the $600,000, did not respond to requests for comment.

Mr. Cole said that amfAR’s lawyer told him the charity was not the target of an investigation but was a witness. “We will certainly cooperate and comply with the subpoena,” Mr. Cole said.

In May 2015, Mr. Weinstein had arranged for two items to be auctioned at an annual fund-raiser for amfAR in Cannes, France, on the condition that half the proceeds would go to the American Repertory Theater, which had done a trial run of his production “Finding Neverland.”

The arrangement served an underlying deal Mr. Weinstein had struck with the theater that allowed him and other investors to be reimbursed for a $1.25 million payment and a $500,000 charitable contribution toward the show if they got third parties to donate those amounts.

It is unclear whether Mr. Weinstein, who was a chairman of the fund-raiser event, disclosed the underlying deal to anyone at amfAR. When the auction came up short, he insisted that the theater get more than half the money raised, and that amfAR wire it immediately. When amfAR officials said they weren’t in a position to share the proceeds because the winning bidders had yet to receive their items, Mr. Weinstein’s company placed $600,000 in an escrow account for the organization on a short-term basis, according to internal amfAR records.

As part of their investigation, prosecutors are examining transactions and contracts between amfAR and Mr. Weinstein and the American Repertory Theater, according to two of the people with knowledge of the investigation. Prosecutors have sought correspondence, payment records, tax documents and any written agreements related to the donations.

Mr. Weinstein defended the transactions in a September interview, saying that everyone involved benefited, and that he told Mr. Cole the money would go to the theater as part of a business arrangement.

That month, Mr. Cole said in an interview that he had agreed to Mr. Weinstein’s proposal because it brought in money for the AIDS cause, ultimately raising $306,669 for amfAR. He said that he did not recall Mr. Weinstein telling him at the time that it would serve an underlying business deal, but that he was satisfied knowing the money was going to a legitimate nonprofit.

Gibson, Dunn & Crutcher, a law firm hired by the amfAR board, reviewed the $600,000 arrangement and determined that it was legitimate and lawful.

But the charity’s chief executive, Kevin Frost, expressed concern to its chief financial officer in a June 2015 email: “Nothing about this deal feels right to me, and I believe we have not done due diligence to understand exactly what this money is being directed to or why amfAR is being used to facilitate these transfers.”

The auction catalog disclosed that some proceeds from one of the items, a sitting with a fashion photographer, would go to the theater. It did not include that note for a Hollywood experience package arranged by Mr. Weinstein.

In April this year, four members of amfAR’s 19-person board expressed concerns about the handling of the transactions to the charities bureau at the office of the New York State attorney general, Eric T. Schneiderman. In a letter to the charity in September, the bureau said the transactions raised several concerns, including whether they “resulted in benefits to private interests,” and told the charity to strengthen its corporate governance.