R&B singer Rihanna (Robyn Fenty) filed a complaint against her former accountants. Berdon LLP, in the U.S. District Court of the Southern District of New York on Thursday, July 5, alleging that the accountants had intentionally kept her in the dark on her financial situation, resulting in millions of dollars in losses and exorbitant commissions paid.
Rihanna hired Berdon in 2005, when she was 16 and just beginning her musical career. She entrusted the firm with providing her accounting, business, and financial management services, information about which you can find if you read more. Under the arrangement, Berdon earned commissions based on a percentage of the singer’s gross receipts. This untraditional arrangement, according to Rihanna, created a conflict of interest, because Berdon had no incentive to counsel the singer to reduce expenses or implement financial controls.
Rihanna learned of the losses in September 2010. Despite the fact that her wildly successful career and tours had earned millions of dollars in revenue, the singer was only receiving a fraction of that amount.
Additionally, according to the complaint, Berdon did not create a proper budget for Rihanna’s “Last Girl on Earth” tour, failed to minimize expenses for the tour, and then did not balance the books for the tour. As a result of this “gross mismanagement,” Rihanna claims, she lost millions of dollars in revenue. Despite this mismanagement, Berdon still paid itself millions of dollars in commissions off of gross receipts from the tour.
The complaint states that Berdon provided services to Rihanna from 2005 to 2010, but neglected to sufficiently report to her the state of her financial affairs in accordance with industry standards, and also failed to create or implement any plan to preserve her wealth.
The IRS is now auditing the singer, which the complaint states is a direct result of Bordon’s negligence. Rihanna also claims that Bordon failed to reveal millions of dollars in unpaid royalties.