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    The Hedge Fund Disaster Behind An Oscar Winner's New Movie

    Geoffrey Fletcher, who won an Academy Award for Precious, financed Violet & Daisy through his brother's now-failed hedge fund — and indirectly ended up screwing over a lot of Louisiana firefighters.

    Violet & Daisy is a small indie film about teenagers gone awry: a violent, surreal, and moralistic fable. But the story of its production is far more dramatic: a tale of ambition, hubris, the global economic meltdown, and... firefighters in Louisiana.

    Around the time that Geoffrey Fletcher won an Academy Award for adapting the novel Push into the 2009 movie Precious, he received a burst of attention from producers who wanted him to write their next movies. Then 38 years old, Fletcher took one of the opportunities that came his way, agreeing to write a screenplay for Bourne Identity director Doug Liman's film about the 1971 Attica Correctional Facility uprising. But he also pushed forward with Violet & Daisy, which he began brainstorming even before he got the opportunity to adapt Sapphire's novel.

    Fletcher had written the script for Violet & Daisy before Precious became an awards season juggernaut backed by the likes of Oprah and Tyler Perry. It was to be his directorial debut, and by October 2010, he had signed up Sopranos star James Gandolfini, Gilmore Girls actress Alexis Bledel and up-and-coming Irish-American actress Saoirse Ronan to lead his cast. Although it is traditionally difficult to secure financing for an independent film from an untested director, Fletcher says that the script "had gotten a lot of attention" from investors.

    "We had three to four companies interested in investing, and in light of all the people who were involved in this film, on both sides of the camera, this looked like an opportunity for investors to benefit," Fletcher told BuzzFeed. "And if you see, by the reaction to the script, all of the Oscar nominees and another Oscar winner attracted to the project, it seemed a good indication that there was promise here."

    One of the interested parties was Fletcher's brother, Alphonse "Buddy" Fletcher.

    A pugnacious hedge fund manager known for both his prolific charitable contributions and litigiousness, Buddy Fletcher started his own investment firm after leaving the storied securities firm Kidder Peabody in 1991 amid a lawsuit he brought alleging racial bias. His new firm, Fletcher Asset Management (FAM), gained attention for claiming impressive returns — as well as the extravagant lifestyle that it afforded its namesake. Beginning in 2008, his firm picked up three public pension funds from Louisiana as clients: the Firefighters' Retirement System of Louisiana, the Municipal Employees' Retirement System of Louisiana, and the New Orleans Firefighters' Pension and Relief Fun. Fletcher guaranteed the pension funds a 12% return on their investments with his group.

    In fall 2010, FAM invested in the film and lent its offices in Manhattan to the production for 10 weeks. In March 2012, it had a $7.7 million investment in Violet & Daisy's production company.

    Hedge fund investment in motion pictures is nothing new; as studios have produced fewer and fewer movies, especially ones with midrange budgets, financing companies have filled in the gaps. Often, funds will partner on a "slate" of films, or a group of movies with varying earning potential. They are selected ahead of time and then infused with cash.

    Studios do get in on the game too: In 2004 and 2005, Merrill Lynch invested in 26 movies from Paramount Pictures. Legendary Pictures — which is behind the new Superman film Man of Steel, the Dark Knight trilogy, and this spring's Jackie Robinson biopic 42 — is made up of a litany of investment firms, and with a specific participation in Warner Bros. films. Legendary, like many other financier-driven companies, has its own creative executives that help shepherd the films along.

    These deals are generally announced with great fanfare in trade publications. In the case of FAM and Violet & Daisy, however, the single-film investment was hidden until it spilled out when Buddy Fletcher's finances started unraveling. Last year, Joe Meals, the adviser working on behalf of the Louisiana pension funds, told the Wall Street Journal that, "We weren't aware of any investment in the film industry. Period."

    Starting with a lawsuit he filed in 2011 against the famed Dakota apartment building for denying him the right to buy another unit, Buddy Fletcher's finances soon began to unravel. It turned out he had been borrowing from his business to support a lavish lifestyle, the fund itself held less than half of its advertised $500 million in assets, and it was loaded with debts.

    The stake in Violet & Daisy was only revealed last summer, when a fund called Fletcher International Ltd. declared bankruptcy as part of an effort to avoid liquidation — the fate met by another one of Fletcher's funds that the Louisiana pension group had sued so that they could salvage the remains of their losing investment. The three pension groups had over $100 million tied up in Fletcher funds and had been told they could pull money out within weeks, but when they tried to cash out, they reportedly received an IOU instead.

    "All of this was carefully checked and authorized," Geoffrey Fletcher told BuzzFeed, intimating that, as far as he knew, the pension funds had knowledge of the investment in Violet & Daisy — though he was careful to qualify his statement by saying that he was speaking with more knowledge of the movie's creative elements than business operations. He added that the equity deals were "structured very favorably to our investors."

    This month, the Louisiana pension funds sued Citco Fund Services, the administrator that had guaranteed the funds half their investment back if FAM came up short. The suit by the funds also named a former FAM auditor and FAM itself, alleging that the funds were not consulted on how their money was being invested. Clearly, should their allegations prove true, the investment in Violet & Daisy will only be a small part of why the Louisiana pensions lost their money. It is a very public symptom.

    GreeneStreet Films, which produced Violet & Daisy, declined to comment for this story, referring all questions to Cinedigm, the company that secured the rights to distribute the movie last year. Cinedigm declined to comment on how much it cost to buy the rights to the film, saying that it did not release financial figures on distribution deals.

    The film has been greeted harshly by critics, with just a 23% positive rating on Rotten Tomatoes. A.O. Scott of the New York Times savaged it, writing, "We don't feel the weight and menace of death, nor the volatile emotions of youth, and have nothing to respond to beyond the spectacle of girls with guns."

    Audiences have been indifferent. The movie was released in 17 theaters on June 7, taking in just $9,982; it will expand to the top 10 markets on Friday, and in a full seven-day period, it made $17,186. It is no longer listed in theaters. The film is due to be released on Video on Demand platforms and DVD, though no date has been made public.

    All three Louisiana pension funds cut ties with Fletcher this past January.

    "My philosophy was to always keep writing. Had I not kept writing, I think the offers and pressures that came in the wake of Precious might have affected me," Fletcher said. "This was a passion project and what happened with Precious never affected my desire to do this."