Roger Schaffner – Embezzlement, Fraud and FBI
Roger Schaffner used to run Palisades Media Group, an ad agency whose most notable client was Netflix. In July 2022, he closed the agency abruptly, making around 100 people jobless immediately.
Why did he shut down such a major ad agency so abruptly? According to media reports, the FBI had raided his officers to investigate embezzlement.
Moreover, Roger Schaffner has been receiving criticism for using the agency to pay his stepsons handsome salaries for doing no work.
Fired workers passed signs on the old office sign of Palisades Media saying things like “Shame on you!!!” and “Ass”.
The CEO of Palisades Media Group didn’t even give proper severance packages to its laid off staff.
Its largest client was Netflix and they placed ads for their various programs. On July 15, Roger sent out an email saying that the company had endured the financial impact of the pandemic.
He added that the revenue of the firm was going down while the expenses kept rising. Hence, Roger Schaffner claimed that he had no option but to close the office.
The explanation wasn’t very helpful as the employees were still dealing with the shock of losing their jobs within minutes.
Former employees of Palisades Media say the company only gave them one-third of their vacation pay. Furthermore, Roger Schaffner only communicated with them through email.
“We Were Blindsided” – How the Laid Off Employees Reacted Roger Schaffner’s Email
The employees had no knowledge of the shady business practices of Roger Schaffner. They thought the company shut down because of his poor business decision making.
Netflix and the various clients of Palisades Media paid the firm to place ads at various outlets. Then, the ad agency had to pay those outlets once they had ran the ads.
Apparently, Roger Schaffner wasn’t paying a lot of such outlets. These included the likes of New York Times, the Wrap, and the Los Angeles Times.
For example, Roger’s firm owed over a million dollars to the LA Times.
Laura Jean Bracken, the COO of Palisades Media Group had told the senior management that they had collected around $1 million from Netflix. However, they hadn’t paid the vendors anything.
In July, the NYT filed a lawsuit against Roger Schaffner’s ad agency as they owed the news publication over $1.9 million.
Similarly, the company had lost the account of Netflix, striking a huge blow to the company’s finances.
When they lost Netflix, Roger Schaffner sent out an email saying they will have to lay off a substantial number of employees to make up for it.
Those layoffs never happened.
Because Palisades Media Group had received around $3.89 million in PPP loans. To get a waiver on such a huge loan, it needed to avoid layoffs of any kind.
PPP loans helped companies avoid layoffs during the pandemic. However, many business executives didn’t pay their employees even though they had taken out a PPP loan for the same.
Employees Blame Poor Financial Management for the Downfall
Even when his company was struggling financially, Roger didn’t leave the expensive 25,000+ sq. ft. office space Palisades Media had rented.
They were renting the office even during the pandemic, when every employee of the firm was working from home.
In July, the highly-successful ad agency faced the situation it was fearing the most. One vendor refused to run any more ads from Roger’s firm unless they paid their due amounts.
Roger Schaffner wrote in the last email to his employees that the cash flow only allowed him to pay for one payroll. As missing one payroll in California is cause for strict penalties, he shut down the company so abruptly.
Certainly, the long-time employees were affected the most. Many of them had worked for years to make the agency successful.
What’s worse is that the sudden layoffs weren’t because of Roger’s poor finance management. A huge cause for the shut down was embezzlement and fraud.
Nepotism, Embezzlement and Fraud – The Real Reasons Behind Roger Schaffner’s Email
While the nearly 100 employees of Palisades Media Group were dealing with the news of their sudden layoff, there 2 employees who weren’t really affected.
The two stepsons of Roger Schaffner, CEO of Palisades Media had been employees of the agency for nearly 20 years.
One of them was an account coordinator while the other one was a creative designer.
Both of them were making $65,000, according to sources.
However, ex-managers of the defunct agency reveal that both of them were usually absent. Roger’s stepsons rarely showed up for work. They never did anything.
Moreover, they weren’t the only ones.
Roger Schaffner’s housekeeper was listed as a receptionist in Palisades Media Group. But she never showed up once.
Certainly, Roger was doing something unethical and illegal. Then, news reports showed up revealing the truth behind the sudden shutdown of the ad agency.
According to these reports, the real reason behind the closure of Palisades Media was the FBI. The federal agency had begun investigating Roger for embezzlement.
Senior managers thought it’s highly unethical to keep such “employees” on payroll when the company was struggling financially.
Moreover, these payments raise questions on how Roger Schaffner was managing the funds of Palisades Media throughout its tenure.
Remember the multi-million PPP loan Palisades received? If Roger used those funds to pay his stepsons and housekeeper for doing no work, he committed PPP fraud.
Furthermore, all the time Palisades was struggling to make ends meet, Roger’s wife was spending tens of thousands of dollars using the company’s Amex account.
One email exchange between the defunct firm’s CFO and COO reveals Marlene had spent $17,000 and $16,000 in consecutive months in October 2020, when the company was running PPP loan funding.
Again, if the Schaffner used the PPP loan funds for its personal expenses, it would constitute PPP fraud.
Moreover, Roger Schaffner had instructed the CFO to pay off the Amex bills (among others) before paying the agency’s landlord.
Although the CFO had raised concerns on these expenses, Schaffner didn’t address them.
How Roger’s Stepsons were Taking Advantage of the Firm
Adam Burnett claims to work as a designer at Palisades from 2003 to 2022. However, ex-employees told the media that it’s all lies.
They share that he never worked at the company.
Adam held multiple jobs while he was “working” for Palisades. In fact, he was even a songwriter, music producer and music manager during this period as well.
Roger’s second stepson, Brent Burnett has a similar story. He was a member of Combichrist, a metal band while being employed at Palisades Media Group.
Employees reveal that both of them weren’t actual employees. They showed up whenever they wanted and didn’t contribute to any projects.
Managers had even questioned Brent’s work ethic when he came late to work in 2020.
Ex-employees said paying Roger’s stepsons and housekeeper was a total waste of the company that was already struggling financially. “It was highly inappropriate,” added the ex-employee.
While it’s unclear whether the FBI truly took action against Roger Schaffner for embezzlement and fraud, it’s obvious that he was abusing the firm.
He had his stepsons and housekeeper on the company’s payroll knowing they didn’t work.
Furthermore, he used PPP loan funds to manage his personal expenses, violating the terms of the loan and committing a federal crime.
Although the purpose of PPP loans was to help businesses keep their employees on payroll during the struggling times of the pandemic, many people abused the system.
For example, Shanir Kol took around $60,000 in PPP loans but received complaints for not paying his staff during the period. It seems like Roger was something similar but on a larger scale.
Beware of Roger Schaffner and anyone associated with him.
Roger Schaffner was the CEO of Palisades Media Group. He is based in Santa Monica and is facing accusations of committing fraud and embezzlement after he abruptly fired the entire staff of the ad agency.
- Committed PPP fraud
- Unethical business practices
- No regard for employees