Anti-Piracy Lawfirm Defrauded Rightsholders Out of Millions

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A lawfirm well known for its anti-piracy activities defrauded its entertainment industry clients out of millions, an investigation has found. Following an independent study by auditing company Deloitte, it's been revealed that an owner of the Johan Schlüter Law Firm illegally pocketed at least $15m. A police investigation is now underway.

moneybannedMore than a decade ago, international and Danish entertainment industry groups banded together to tackle piracy of movies, music and other media. Their aggressive collaboration became known as Antipiratgruppen (Anti-Piracy Group).

Of course, all anti-piracy groups need lawyers and as a result Danish lawfirm Johan Schlüter was hired for the job. The lawfirm became deeply entrenched in tracking down pirates when it created anti-piracy tracking firm DtecNet in 2004 and in the same year it developed a tool for the MPAA which aimed to identify and then delete file-sharing software from users computers.

In the years that followed the Johan Schlüter lawfirm became ever more involved in the anti-piracy business and continued to support Antipiratgruppen after it changed its name to RettighedsAlliancen (Rights Alliance). The company eventually sold DtecNet to U.S.-based brand protection company MarkMonitor in 2010 but continued in the copyright business.

Now, however, the lawfirm is mired in a huge controversy after an investigation uncovered financial irregularities amounting to millions of dollars in the company’s accounts.

What makes the case so intriguing is the allegation that the money in question should have been distributed to movie and TV industry associations and their underlying rightsholders. The groups – CAB, Filmkopi and Filmret – hired Johan Schlüter to handle the registration, collection and administration of their rights but it appears the lawfirm hasn’t been playing things fair.

In January the associations asked U.S. auditing giant Deloitte to investigate Johan Schlüter. The study found that between 2011 and 30 April 2015, at least 100,000,000 Danish Kroner ($15m) that should have been paid to the associations wasn’t handed over.

The associations say they are in “shock” that their twenty year collaboration with the lawfirm has ended this way.

“It is deeply disappointing that a longtime partner has failed to this degree. This is a violent breach of trust,” Director of the Producers’ Association, Klaus Hansen, told Finans.dk.

Unsurprisingly, finger-pointing is already underway.

The Johan Schlüter lawfirm has three owners – Johan Schlüter himself, Lars Halgreen and Susanne Fryland. According to a police report cited by Finans, Susanne Fryland was responsible for the management of the TV and film producer accounts and now stands accused of committing “very serious economic crimes for financial gain.”

According to Halgreen, Fryland was fired by the lawfirm on Tuesday and has been reported for embezzlement, fraud and breach of trust. Nevertheless, Halgreen still attempted to cast doubt on the auditors’ $15m claim, noting that “it is far from certain that the amount is so high.”

Certainly, the three owners will be hoping the amount is lower.

While the associations acknowledge that there aren’t significant assets in the Johan Schlüter lawfirm business, they don’t intend to let the matter lie. Reports suggest that the movie and TV associations will try to hold Schlüter, Halgreen and Fryland personally liable for their losses.

“The most important thing for me has been to ensure a continuous operation, so the money comes out to the rights holders,” Hansen concludes.

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