EXCLUSIVE: The lead producers of the recently-shuttered revival of Cabaret responded this week to a lawsuit by an Atlanta investor who alleged that he and other backers had been defrauded. Led by theater conglomerate ATG Entertainment, the producers filed a motion to dismiss the complaint and its “wild and unsubstantiated accusations” and said the investor tried to extort them before he sued.
Cabaret closed on Sunday after grossing $90.3 million over 610 performances at the ATG-owned August Wilson Theatre. It hasn’t returned any money to its Broadway backers for a total loss of its $24.25 million capitalization.
Cabaret‘s failure wasn’t unusual; hit musicals have been few and far between since the pandemic as production expenses ballooned. But it’s rare for a producer-investor dispute to play out in public. Cabaret was unusually pricey. In addition to its upfront costs, in the first seven weeks after officially opening, expenses averaged a daunting $1.5 million a week, according to a financial statement filed with New York State Attorney General Letitia James.
In his complaint filed Aug. 29 in New York State Supreme Court, lawyer and investor James Lorenzo Walker Jr. alleged that the producers concealed revenue and diverted payments — a “wholesale misappropriation of investor funds” that “represent clear violations of fiduciary duties, contractual obligations and New York law.” Walker’s complaint noted that ATG owns the theater and is Cabaret‘s lead producer, or general partner.
The producers, citing New York law that a fraud complaint must be detailed, denigrated the allegations as “bare-bones.” Walker “fails to offer any factual basis for his claims of fraud and mismanagement,” they wrote in court papers.
The producers highlighted a July 25 letter Walker sent demanding Cabaret box office statements, bank records and contracts. In the letter, which he filed in court, he also demanded the return of the $50,000 he invested in the show, plus interest, plus $40,000 in attorney’s fees. Otherwise, according to his letter, he’d sue — which he did.
Walker’s letter was “an obvious attempt to shake down” the producers, they wrote in court papers.
“It’s not extortion,” Walker told Broadway Journal. “It’s accountability.” Walker insists that he would’ve dropped the demand for the money had the producers provided the financial info he requested.
In an earlier email to the producers, which Walker shared with Broadway Journal, he also demanded the return of his money, and that a few other investors be reimbursed. Otherwise, he threatened to conduct a “full total audit” of the show.
John Rogers, ATG’s general counsel for North America, and Chris Morey, Cabaret‘s general manager, offered to walk through the show’s financial statements with Walker, according to a July 30 letter that the producers filed in court. Walker declined the offer, Rogers noted in the letter.
Rogers wrote to Walker: “You said that the only thing that you were interested in knowing was how much the producers have made on the show — inferring that you can force the producers to refund your investment by simply establishing that the producers have been compensated while the investors are not receiving a return of capital. You didn’t advance this as an actual legal argument — you expressed unflinching confidence that a jury is going to agree that it’s unfair for producers to get any compensation for their immense efforts to mount a show until equity capital is returned. Of course, you declared that you would be influencing the outcome by inciting a barrage of press coverage.”
In the interview, Walker denied threatening to “weaponize press coverage,” as Rogers put it. “We said the total opposite,” Walker told Broadway Journal. “‘We do not want a messy media battle that could have any adverse effects on the show.’ So they are mischaracterizing our conversations of five months and mischaracterizing their willingness to be transparent.”
Walker said the standard financial statements that Rogers offered to explain were insufficient. “If you really lost money, why should you have trouble putting up proof of losses, with receipts?” Walker said in the interview. “Receipts don’t lie.”
According to the Cabaret operating agreement, the lead producers are required to keep “complete and accurate books and records” and make them available to investors, a standard clause. The agreement doesn’t specify the form of those records. ATG’s Rogers wrote to Walker in July that “the show has complied with its financial reporting obligations to you” and “we don’t know how you would use any information volunteered by the show at this point.”
Rogers noted that the producers started waiving their fees and royalties in October 2024 to reduce the show’s operating expenses — a standard measure on struggling shows. “You made an investment based on terms that were clearly stated in the investment documents that you signed,” Rogers wrote to Walker before he sued. “Providing some level of compensation to principals while engaged in efforts intended to enrich passive investors is an accepted business practice that goes well beyond Broadway.”
Since Walker filed his suit, he said he’s heard from other backers who don’t understand why the show hasn’t repaid them anything. “There are dozens of investors who have the same questions I have.”
