Several years ago I was asked to write a short article for Billboard about what artists should look for in business managers. I came up with really dull observations like making sure that the business manager is experienced in state and local taxation and making sure the artist understands the fee arrangement. If I had had any foresight, I would have probably added: make sure your business manager does not rob you blind.
Alanis Morrissette just sued her former business manager Jonathan Schwartz and his (now former) firm GSO Business Management, LLC claiming that Schwartz converted nearly causes of action in the lawsuit includebreach of fiduciary duty, fraud, conversion and negligence.
The allegations against Schwartz are pretty sordid but to me the real disturbing factor here is the allegation of negligence against the firm, GSO. It may be shocking to think that a major business management firm with some of the most respected professionals in the industry would not have the checks and balances in place to monitor this kind of activity, especially over a four year period.
It's shocking but not surprising. There are constant examples of this kind of financial fraud not being discovered by the principals of their firms until it is too late. I have witnessed this firsthand on more than one occasion. It is not always out and out fraud. Sometimes it might be a case of employee negligence not being uncovered. There are always going to be bad actors but it seems that these firms must do a better job of monitoring their client’s accounts and anybody who places their financial well being in the hands of a fiduciary third party should pay close attention to the activity in their account. This is something that artists (and the rest of us) probably fail to do as often as we should.