Agency draws scrutiny over jobs for CEO's stepsons, housekeeper

By Wendy LeeStaff Writer

Aug. 17, 2022 12:47 PM PT

For nearly two decades, the two stepsons of CEO Roger Schaffner were employed at his Santa Monica ad agency Palisades Media Group. One was a creative designer and the other was an account coordinator, according to an organization chart. They were each paid $65,000 a year, said a person with direct knowledge of their compensation.

There was just one problem. Managers at the now-defunct agency say the sons did not actually perform their duties and rarely showed up for work.

They said the same thing about another person close to the CEO: his housekeeper. She was listed as an administrative assistant/receptionist in an organization chart, but former employees said they were unaware what work she actually performed at the once-prominent player in the Hollywood advertising business.

The payments have drawn scrutiny among many of the roughly 90 employees who lost their jobs when the company, which handled advertising campaigns for Netflix and other prominent clients, abruptly shut down after citing cash flow problems.

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Senior managers were told by Palisades’ president and chief operating officer last month that the company took in $14 million to $16 million from their clients, but did not pay that to vendors who ran ads, according to two people familiar with the discussions who declined to be named. The New York Times and Los Angeles Times are among the businesses owed money, sources said.

“It’s unethical they would maintain these people on our payroll when the company is struggling,” said one former employee who declined to be named for fear of reprisals. “It was just highly inappropriate.”

The payments raise larger questions about how the company used funds at a time when it was facing steep financial problems after Netflix scaled back its business with Palisades Media Group earlier this year.

During the period the sons and the housekeeper were compensated, Palisades received federal loans through the Paycheck Protection Program, which was intended to help companies offset business losses caused by the COVID-19 pandemic. In 2020 and 2021, Palisades took $3.89 million in federal loans through the program, to cover costs including payroll and healthcare, according to ProPublica.

Adam and Brent Burnett, Schaffner‘s stepsons, did not return multiple requests for comment.

A man with long hair and tattooed arms plays the electric bass on a colorfully lighted concert stage.

Schaffner in an email did not respond to questions about the payments to his sons or housekeeper, but cited what he described as “inaccuracies” and “innuendo” spread by “disgruntled employees.”

“All the misinformation you think you have so cleverly gathered has absolutely zero to do with why I closed the company,” he wrote.

At the beginning of this year, Schaffner wrote, clients cut their retainers to Palisades by $6.4 million, 33% less than the previous year. He said he closed Palisades Media only after unsuccessful efforts to sell the business, find new revenue sources and cut costs as the “red ink was mounting.”

“This was a perfect storm financially that would be difficult to overcome,” Schaffner wrote.

Schaffner started Palisades Media Group in 1996, after working at media agency ICG, where he built an entertainment division representing independent movie studios, according to his LinkedIn page.

Palisades handled media buys for various Hollywood clients, including Fox Searchlight and Miramax, the influential studio founded by Bob Weinstein and his brother, Harvey, the former movie mogul who was convicted in 2020 of committing a criminal sexual act and third-degree rape.

The agency built a reputation of having talented professionals who worked with studios and brands such as Mercury Insurance and the Los Angeles Philharmonic. In 2000, Schaffner described Palisades as a $250-million business to Ad Age.

During the pandemic, however, the company’s fortunes began to change and tensions grew internally over spending practices, according to emails viewed by The Times.

Chief Financial Officer Russell Dean raised concerns about expenses Schaffner and his wife, Marlene, had allegedly charged to an American Express account. In an Oct. 28, 2020, email to Laura Jean Bracken, the company’s chief operating officer and president, Dean said the most recent Amex bill was just over $17,000; the prior month was more than $16,000.

“It’s just so unbelievably irresponsible,” Bracken responded in an email.

Earlier that month, Schaffner instructed Dean to pay Jaguar, phone and American Express bills before paying rent to the company’s landlord as cash flow problems worsened, emails viewed by The Times show.

“We have past due notices on all which will impact our credit rating,” Schaffner wrote in a Oct. 9, 2020, email. “Do not pay rent to our uncaring landlord and pay our bills. I’m not asking I’m telling you to do this!”

Dean responded later that day saying he had already paid the Jaguar and American Express bill on Sept. 30, as well as an AT&T mobile bill on Oct. 8. “Any delays in payment is due to cash flow problems of which I have made you aware,” Dean wrote in an email.

Dean and Bracken did not respond to requests for comment. Three sources close to Palisades confirmed that Dean had raised concerns about the Amex expenses to Schaffner.

Schaffner declined to discuss the email communications, but in his statement said, “In 26 plus years we never one time missed a rent payment.”

The employment of Schaffner’s stepsons also drew scrutiny internally.

On LinkedIn, Adam Burnett describes himself as a designer at Palisades from 2003 to 2022, with clients including Focus Features, the Weinstein Co. and United Artists.

However, three people who were familiar with those accounts and who were not authorized to speak publicly, said they did not believe Burnett worked for those clients or that he provided work for Palisades in at least a decade.

“This is completely falsified,” said a former senior executive who declined to be named for fear of reprisals, referring to Burnett’s LinkedIn description of his work at Palisades. After the Times reached out to Adam Burnett for comment, his LinkedIn page was taken down.

While employed at Palisades, Burnett held other jobs during the same time frame, including serving as a music manager at Cafe Claude from January 2019 to March 2020, designer at Belding Associates from 2010 to 2018, and being a songwriter and music producer, according to his LinkedIn page.

A man wearing a black patterned crewneck shirt sings and plays electric guitar.

Brent Burnett’s performance at Palisades had been the subject of concern among his bosses, according to interviews and emails viewed by The Times. Like his brother, he also worked in the music business and was a member of the metal band Combichrist, according to his Instagram profile.

Around the office, it was known that “both Adam and Brent weren’t real employees,” said a second former Palisades manager who declined to be named. “He came in when he wanted to and left when he wanted to,” the former manager said of Brent Burnett. “You couldn’t give him real responsibilities. You didn’t know if he was going to show up the next day.”

Palisades managers were asked by Schaffner to give assignments to Brent Burnett in 2020 after Schaffner told them his son wanted to do more work at the office, former employees said.

Brent Burnett’s work ethic was questioned by managers after he came late to work in February 2020, citing excuses such as oversleeping or, in one case, wanting to follow through on plans to meet friends at the San Pedro Artwalk instead of going into the office, according to emails.

“He is usually 1-2 hours late everyday,” a manager wrote in a memo about Brent Burnett’s performance. “When he works from home he is frequently incommunicado. He will need to significantly improve his attendance, punctuality and skillset to match the pace of a junior designer.”

After learning about Brent Burnett’s work performance, senior leaders at the agency acknowledged that they could not depend on him, according to two people familiar with the discussions who declined to be named for fear of retribution. Those people and a third source familiar with Brent Burnett’s employment said they do not believe he worked for Palisades in 2021.

Brent Burnett did not respond to a request for comment.

Alba Hernandez-Vindel had been employed at Palisades since 1998 and recently had a yearly salary of $49,500, according to a person familiar with her compensation who declined to be named because they were not authorized to speak on the matter.

Four former employees said they were told by Schaffner or his wife that Hernandez-Vindel was their housekeeper. The former staffers said they never saw Hernandez-Vindel in the office or were aware she performed work duties at Palisades Media.

Hernandez-Vindel could not be reached for comment.

“It was just pure waste for a company that was struggling to survive to have multiple people on payroll that weren’t contributing,” said a former employee who declined to be named. “It was just highly inappropriate.”

Times staff writer Steven Vargas and researcher Scott Wilson contributed to this report.

Ex-employees of shuttered agency raise questions about jobs for CEO’s stepsons and housekeeper

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