'You broke my heart': Accountant allegedly swindled Pacino out of $50M

In an industry where relationships and financial planning intertwine, if you don’t have either, what else do you have? Apparently, nothing, at least in Al Pacino’s case.

In 2011, as the Academy Award-winning actor tells in his recent memoir "Sonny Boy," his savings account went from $50 million to zero after his accountant at the time reportedly mismanaged his funds. The accountant later served seven and a half years in prison for running a Ponzi scheme.

"I was broke. I had $50 million, and then I had nothing," Pacino told Variety. "I had property, but I didn’t have any money. In this business, when you make $10 million for a film, it’s not $10 million. After the lawyers, agents, the publicist, and the government, it’s not $10 million, it’s $4.5 million in your pocket. But you’re living above that because you’re high on the hog. And that’s how you lose it. The more money you make, the less you have."

"I wasn’t even signing my own checks. The accountant signed them and I just let them go by," he added, per Us Weekly. 

There’s sure to be a lesson in this somewhere, especially for advisors and their clients in the arts. Julian Schubach, partner at ODI Financial, whose niche is in financial planning for clients in the entertainment and performing arts space, said he has seen all kinds of bad financial planning.

"The entertainment business is well known and littered with these awful stories of people who have been victims of fraud and taken advantage of," he said. But Schubach said he believes the industry has evolved to provide more safeguards for creative professionals.

The key, he said, is the separation of church and state, ultimately ensuring an entertainer's financial life is not managed by a single gatekeeper.

"Years ago, it used to be that an artist or an entertainer would basically have one go-to person, somebody who was doing their bookkeeping, their accounting and taxes, as well as their investment management and wealth management," Schubach said.

"We've kind of moved away from that today,” he added, noting that most entertainers have both a business manager handling day-to-day finances and taxes, as well as a separate financial advisor managing investments and financial advice.

This "collaborative team approach," provides a system of checks and balances. The advisor can review the business manager's work, and vice versa, reducing the risk of fraud.

When he starts working with an artist, he’ll request to speak with the business manager or accountant and take a look at the previous two years of profit and loss statements, and “get a good understanding of cash flow and who else is on the team,” he said.

“It gives me the ability to see if there’s any red flags we should discuss and gives their accountant the opportunity to make sure everything looks kosher, the statements are accurate, and everything should be the way that it is,” he added. “I think that's a real benefit now compared to how it was in the past.”

Of course, this collaborative approach only works if the client remains actively involved.

"Ignorance is not bliss in this industry," Schubach warned. “In this industry, you need to have some level of involvement to make sure things are going smoothly and your best interests are being taken care of.”

He advises his clients in the industry to schedule regular meetings, at least annually or semi-annually, with their full financial team to review statements, budgets, and legal documents.

"It's really important that the client understands exactly what power of attorney is, and to make sure that they're able to check in from time to time and understand what it is that [their business manager] is signing and where their name is going," he said.

Beyond the professional team, he cautions advisors and clients alike to understand the roles and responsibilities of each member of the financial team but also to be wary of family members.

"We've seen time and time again artists who have been swindled by their own family," he said, citing examples like comedian Dane Cook, who was cheated by his brother, and baseball player Shohei Ohtani, reportedly swindled by his interpreter.

"Unfortunately, money can make people act funny."

Schubach also highlights the unique financial planning challenges faced by entertainers, such as fluctuating incomes and the need for liquid emergency savings. Initially, many clients invest too heavily in illiquid assets like real estate or restaurants, he said, leaving them vulnerable during business interruptions.

As a result, one solution advisors can do to help these clients is simply empowering them through financial education.

"A lot of the folks that we work with when they first come to us, they just don't have that good education about what to do with money, how to budget, how to build the right team, and how to protect themselves against fraud and being taken advantage of."

At the end of the day, he said it’s really important for advisors working in this space, to understand that timelines are going to be “a little bit different” than working with a typical client who works a nine to five office job.

“When working in this space, you're dealing with folks who have erratic schedules and are out on tour, on the road, quite often,” he said. “It's important to be able to set expectations, be fluid and malleable, and be able to adapt to what works best for the client.”