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What Links Johnny Depp, Mike Tyson, and Kevin Bacon?

When we consider how much money celebrities make, it is amazing to think that they may also have financial issues. If you have all the money in the world, it just means you have more ways to spend it on the road to bankruptcy. However, if you manage your finances well, you will be a step ahead of many celebrities.

While some advisors choose to act as a fiduciary for their clients, others merely act in a suitable manner, while still others blatantly choose to act in their own best interest instead of their client’s. Johnny Depp, Mike Tyson, and Kevin Bacon have each filed a lawsuit against former financial advisors and business managers. They claim their advisors used their money as their own and grossly mismanaged their assets. So how do their missteps affect us?

The Washington Post reported that one of Tyson’s former financial advisors took an estimated $550,000 from him and used the proceeds to pay for hotels, gambling, dental work, tanning services, and private school tuition for a girlfriend’s relative. Those men were forced to repay the noted amount and are now facing significant jail time.

Johnny Depp’s former business managers allegedly engaged in both mismanagement and outright fraud, so Depp sued them for $25 million. The filing states that the managers paid themselves nearly $30 million in contingency fees without a written agreement and also failed to file and pay taxes on time.

Kevin Bacon lost nearly everything in Bernie Madoff’s Ponzi scheme. There are reports that he, his wife, and kids only have their home and their checking accounts left – the fraud was exposed in 2008 when Madoff was arrested. He is serving a 150-year sentence in a federal prison in North Carolina. Bankruptcy lawyers have been working to recover the lost funds ever since. Debt officials have so far recovered more than $11 billion of the $17 billion lost in the scheme. According to court filed papers, some lucky investors will receive full repayment.

Stephen P. Harbeck, President/CEO of Securities Investor Protection Corp, who is working on the case, told ABC News: “The calculations are that anyone who put in $1,161,000 is gonna be made completely whole in this distribution. And that’s most of the people who have valid claims.” Others who invested more than $1.1 million will recover almost two thirds of their money. Harbeck adds: “Coming out of a Ponzi scheme with 61 percent of what you started out with is a major victory.”

Bacon previously opened up about his links to Madoff in a 2011 Details Magazine interview, admitting the reality of his family’s losses hit him and his wife hard, but they were determined to get on with their lives. “I’m not going to say it didn’t have its emotional downsides, but we were both young and we both had the ability to work and roll up our sleeves and start putting the pieces back together,” he said. “The truth is that we went through it together.”

I wonder how these successful people made these very bad choices. How did they make the decisions to hire these people in the first place? What credentials did they have? I wonder if the three people mentioned in this blog are simply the tip of the iceberg of financial misconduct. If you have questions, we would love to do our best to answer them for you!

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