Labor Department Document Sheds New Light On Secret 2011 SAG Dues Hike; Union Responds – Update

UPDATED with SAG-AFTRA statement, 5:14 PM: A U.S. Department of Labor document obtained by SAG-AFTRA presidential candidate Peter Antico is raising new questions about the Screen Actors Guild’s decision to secretly raise the dues of 771 high-earning actors back in 2011. The secret dues hike, which reportedly raised $1.5 million for the union, targeted some of the biggest names in Hollywood including Tom Cruise, Angelina Jolie, Johnny Depp, Ray Liotta, Helen Hunt, Tea Leoni, James Cromwell, Julie Christie and Kevin Kline.

Antico, who says he’s running for president to bring more transparency to the union, obtained the DOL document – and many others – through the Freedom of Information Act. “The report is further evidence of the lack of honesty and transparency present at SAG-AFTRA,” he told Deadline. “It’s about time that SAG-AFTRA vote in honest leaders.”

When the Los Angeles Times first revealed the secret dues hike two years ago during the run-up to the union’s last election, SAG-AFTRA officials said that it had all been on the up and up. Then-union President Ken Howard told the Times that the hike was initiated by prominent SAG members who believed they were not paying enough dues. “This was brought to our attention by some of our high-profile members, and there was a lot of support for it,” he said. “It all seemed very positive to me.”

Howard died last year and was succeeded by Gabrielle Carteris, who is expected to seek another term. Elections will be held in August.

Membership dues are based on a percentage of earnings reported by production companies to the SAG Pension & Health Trust Funds. At the time, no dues were charged on earnings of more than $1 million, but today dues are capped after $500,000.

“This led to under-billing in certain cases and, therefore, a built-in inequity in our dues structure,” SAG-AFTRA spokeswoman Pam Greenwalt told the Times. “In 2011, the union reviewed its methodology for assessing work dues and, after a discussion by and the unanimous approval of the finance committee, introduced a more accurate method.”

The newly discovered DOL document, however, raises serious questions about the veracity of the union leaders’ account of the secret dues hike. 

In 2012, the DOL was conducting two separate investigations of SAG and its Pension & Health Plans. One probe would uncover a $54,000 embezzlement of actors’ residuals by Michelle Dancy, the former manager of the union’s residuals estates and trust department, and the other found a $2.7 million kickback and embezzlement scheme by Nader Karimi, the of head information technology at the SAG Pension & Health Plans.

On the morning of June 12, 2012, just six weeks after the merger of SAG and AFTRA, a DOL special agent sat down for an interview with a female source – either a current or former SAG staffer – whose name and title are redacted from the agent’s report (read it here).

“In May of 2011,” the agent wrote after conducting the interview, “the union randomly increased the amount of reportable earnings for 771 members so that their reportable earnings reflected the maximum amount ($1 million) that they could be charged for dues. SAG records were created to reflect this higher amount even though their reportable earnings were lower based on the Trust reports.”

The source told the special agent that she became aware of the problem “when several members began to question the amount of dues they were being charged by the union. Seventy-one members had called complaining about how they were being charged.”

The source said that some of those who complained were asked to provide their IRS W-2 forms “so that their dues could be adjusted,” but the source alleged that “the practice of requesting the W-2’s was to further the fraud since the dues amount should have been based on reportable earnings to the Trust Fund and not actual earnings as reported on W-2’s.”

The source provided the special agent with the names of many SAG staffers who she said were aware of the overcharging but said she “does not believe that SAG board members are aware of what was going on.” She added that “those involved did this because they wanted to hold on to their jobs.”

The members were overcharged “because the union was having financial problems,” she told the special agent, and “the overcharging of dues was an abuse of their responsibility to the membership.”

In his report, the special agent noted that “there were no additional payments to the pension and health fund as a result of the overcharging of membership dues,” meaning that dues were being paid on inflated earnings that weren’t producing any added income for the benefit plans.

No one at SAG-AFTRA ever was charged with wrongdoing because of the overcharging of dues.