Danny Wimmer Presents Alleges Law Firm Moved Funds To Appear Insolvent

Amy Harris / Invision / AP – Avenged Sevenfold
Avenged Sevenfold performs during Rock On The Range at Mapfre Stadium in Columbus, Ohio, May 19.

Danny Wimmer Presents may have won the battle for clear ownership of the company in a duel with its former law firm, but finds itself back on the court docket with the filing of a new suit claiming law firm Davis Shapiro fraudulently transferred assets to its partners in order to appear insolvent and unable to pay court and other costs from the case.

Filed in Los Angeles Superior Court’s Santa Monica district Aug. 7, the DWP complaint alleges that Davis Shapiro Lewit Grabel Leven Granderson & Blake partners Damien Granderson, Steven Shapiro, Liza Shapiro, Richard Grabel, Peter Lewit, Jeffrey Leven, Guy Blake and Jana Blake received money transferred from partnership into personal accounts Dec. 29, just days before a hearing on DWP’s motion for fees from the suit that was originally filed in 2015.

The fund transfers were fraudulent and intended to make Davis Shapiro appear insolvent and unable to pay the fees, the new suit alleges.

Danny Wimmer Presents on Jan. 3 was awarded fees in the suit of just more than $1.07 million, bringing the total principal amount of the judgment against Davis Shapiro to $1.19 million.

The law firm immediately appealed both the judge’s ruling in the case and the awarding of fees but on Aug. 3 filed notice that the company is partially abandoning its appeal – of the ruling, but not of the fee award.

In the Aug. 7 complaint, Danny Wimmer Presents alleges that “On December 10, 2017, counsel for the plaintiff wrote to counsel for Davis Shapiro, informing him that if the partners of Davis Shapiro paid themselves large sums of cash at year end, they ‘should expect that they may become targets of a fraudulent conveyance action.’ The correspondence in question noted that counsel for Davis Shapiro had previously intimated to counsel for the Plaintiff that he doubted that Plaintiff would be able to collect its full judgment.”

DWP CEO Danny Hayes tells Pollstar the attorneys learned in discovery that once the judgment was rendered, Davis Shapiro failed to post a bond for the judgment. 

“So we started the collections process,” Hayes said, “and one of the parts of the process is they have to turn over financials. We were able to ascertain that information. 

“We won the issue that they don’t own any piece of the company. We were awarded fees and costs of about $1.2 million. They of course appealed both the ownership and fee issue.

“They have just recently dropped the appeal on the ownership and that’s the most important part. There’s no longer a cloud on our ownership, and that’s a real big deal for us. We are trying to collect on the fees, and that led to the new suit.”

Brian Grossman, an attorney from the Los Angeles law firm of Tesser Grossman who represents Davis Shapiro in the case, scoffed at the newest lawsuit, saying there’s no basis for it because the transfers were normal procedure and the fees are on appeal and not yet collectible.

“The transfer was based upon a distribution that the law firm makes to its partners at the end of every year, because a Limited Liability Partnership, like a Limited Liability Corporation, has a situation where the income taxes are paid by the partners,” Grossman explains. “It’s completely standard practice for the partners in this company and others to make distributions to members or partners, as the case may be, that is consistent with their share of the partnerships profits. 

“It’s theirs, and they have to pay taxes on it,” Grossman tells Pollstar of the transfers to Davis Shapiro partners. “LLPs and LLCs don’t keep their money. They make distributions. And this is what happened this year just as it did in 2016, 2015, 2014 and so on for all time since the company has been in existence. So nothing illegal, nefarious, underhanded or sneaky occurred. The firm did what it does every single year.”

Grossman stresses that the Dec. 29 fund transfers are a coincidental function of year-end distributions. Had the ruling come in July rather than January, the optics of those payments would have been far different. But the fact remains, he says, the payments were S.O.P.

“The hearing on the attorneys’ fee award was January 3,” Grossman said. “It could have been a few months earlier or later. It happened to be then. They distributed the money and at no time whatsoever did the firm attempt to defraud any of its creditors and, as a matter of fact, the money isn’t even collectible yet because it is still on appeal.”

A case management conference between the parties is scheduled Feb. 4 unless they can come to a meeting of the minds prior to that. 

The original suit was resolved when a judge ruled that Davis Shapiro did not retain a 14.3 percent membership interest as an early investor in DWP’s first Welcome To Rockville festival in 2011, and no claim to income from the successive – and vastly successful – events produced by DWP to come. 

Among Danny Wimmer Presents properties are Rock on the Range in Columbus, Ohio; Rock Allegiance in Camden, N.J.; Northern Invasion in Somerset, Wis.; Monster Energy Aftershock in Sacramento, Calif.; Open Air fests in Chicago and Houston; Carolina Rebellion in Concord, N.C., and, most recently, Bourbon & Beyond in Louisville, Ky. 

Several of the events take place in May, which DWP has unofficially branded “The World’s Loudest Month.”