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SeaWorld under criminal investigation

US Dept. of Justice reviewing company statements about 'Blackfish'

ORLANDO, Fla. – SeaWorld Entertainment Inc. is under criminal investigation by the U.S. Department of Justice for statements made by company executives about the documentary "Blackfish," court records obtained by News 6 reveal.

In June, SeaWorld officials disclosed that the DOJ was investigating trades of SeaWorld securities made by company executives following the film's release in 2013, as well as statements about how the documentary was impacting the company.

Sandra Moser, acting chief of the DOJ's Fraud Section, confirmed in court filings that her division is conducting a criminal probe into SeaWorld.

The DOJ's Fraud Section investigates and prosecutes sophisticated economic crime.

WKMG reported that Moser filed a motion in federal court Friday seeking to intervene in a 2014 civil lawsuit filed by a group of SeaWorld shareholders.

The investors claim SeaWorld executives misled them about the impact "Blackfish" was having on theme park attendance and revenue.

The DOJ is asking a judge to delay depositions in the civil litigation until Nov. 30, suggesting that the process of attorneys questioning witnesses as part of the lawsuit "may implicate and negatively affect the ongoing criminal investigation," the motion states.

A SeaWorld spokesperson declined to comment on the new court filing. The company has previously stated it is cooperating with federal investigators.

Last week, former SeaWorld Chief Executive Officer Jim Atchison obtained his own attorney, court records show.

Atchison, who is named as a defendant in the lawsuit, had previously been represented by SeaWorld's legal team.

Gil Soffer, Atchison's new attorney, did not immediately respond to an email from News 6 seeking comment.

Atchison resigned as SeaWorld's CEO in January 2015.  The company is now led by Joel Manby.


Jim Atchison

Shortly after "Blackfish" first aired on CNN, Atchison publicly denied the documentary was hurting the company, instead attributing attendance declines to bad weather, the timing of holidays and higher admission prices.

"I scratch my head if there's any notable impact from this film at all," Atchison told the Wall Street Journal in November 2013.

Between Dec. 2, 2013, and March 6, 2014, Atchison sold 154,000 shares of his personal holdings in SeaWorld stock with proceeds of $4,662,235, according to the lawsuit.

On Aug. 13, 2014, while reporting poor quarterly earnings, SeaWorld officials announced a 4.3 percent decline in attendance, which they partially blamed on school calendars and new attractions at competing theme parks like Walt Disney World and Universal.

For the first time, however, the company also acknowledged the attendance drop "was impacted by demand pressures related to recent media attention surrounding proposed legislation in the state of California," according to a filing with the U.S. Securities and Exchange Commission.

The proposed California law would have banned the display of captive killer whales for entertainment purposes. The bill's sponsor, California Assemblyman Richard Bloom, said the proposed law was partially inspired by "Blackfish."

"The company had finally admitted that 'Blackfish' was hurting attendance at SeaWorld parks," states the lawsuit.

Almost immediately after SeaWorld announced those poor quarterly results in August 2014, the company's stock price plummeted nearly 33 percent.

As a result, two of the investors suing SeaWorld, the Arkansas Public Employees Retirement System and a teacher's pension fund based in Denmark, said they suffered more than $4 million in losses.

Although the lawsuit claims Atchison possessed inside information concerning the impact "Blackfish" was having on attendance, the plaintiffs do not directly accuse the former CEO of illegal insider trading.

Instead, the plaintiffs suggest Atchison's financial transactions indicate a possible motive for misleading investors.

"(The) sales were suspiciously timed in that they were Atchison's only sales" between SeaWorld's initial public offering in April 2013 and the stock price plunging in August 2014, according to the lawsuit.

The plaintiffs also claim the sales were “suspicious" because Atchison disposed of 20 percent of his total holdings of SeaWorld common stock during that period.

Atchison's trades were made pursuant to a Rule 10b5-1 trading plan, according to the lawsuit.

The rule, established by the SEC, helps company executives avoid accusations of illegal insider trading by allowing them to schedule predetermined stock transactions prior to gaining insider information.

"The company has not disclosed any facts about Atchison's Rule 10b5-1 trading plan," according to the lawsuit. "Thus pertinent facts, such as when Atchison entered into the plan are not available because they have not been publicly disclosed."

SeaWorld attorneys have denied the allegations outlined in the lawsuit.

In a June filing, SeaWorld announced that it was the target of the DOJ investigation and separate probe being conducted by the SEC.

"On June 16, 2017, the Company's Board of Directors formed a Special Committee comprised of independent directors with respect to these inquiries," SeaWorld officials wrote in the SEC filing. "The Company has cooperated with these government inquiries and intends to continue to cooperate with any government requests or inquiries."


About the Author
Mike DeForest headshot

Emmy Award-winning investigative reporter Mike DeForest has been covering Central Florida news for more than two decades.

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