Rihanna Admits She Was Bankrupt, Blames Poor Accountant
It’s hard to believe that a very successful star like Rihanna was at one point bankrupt!
According to legal documents obtained by TMZ, Rihanna allegedly had $11 million in the beginning of 2009 but admitted that because of her accountant she was left with $2 million that year. To make matters worse her expenses doubled, leaving her broke.
The pop star sued her former accountants for millions of dollars in losses from her international and national tours, shady bookkeeping and failure to advise her to cut expenses as her 2009 ‘Last Girl On Earth; tour was losing money and was under an IRS audit. According to ABC News:
By the “Last Girl On Earth” tour in 2009, Rihanna learned that the tour had managed “significant net losses” despite robust revenues, though the defendants had managed to pocket 22 percent of the tour’s total revenues while paying Rihanna just 6 percent of revenues, the lawsuit said. It said Berdon’s unsual accounting practice of paying itself a percentage of gross tour income as commissions left it no incentive to “counsel” Rihanna to reduce expenses or put in place appropriate financial controls.
The lawsuit alleged that the practice of paying itself commissions on revenues was not standard in the accounting and business management industry and created a clear conflict of interest.
Rihanna’s lawyers also blamed the accounting firm for an ongoing IRS audit of her tax returns, saying she was forced to spend significant resources to correct errors resulting from negligence.
According to the lawsuit, the singer hired the accountants in 2005 when she was a 16-year-old from Barbados launching her career. She alleged that they repeatedly breached their agreements, engaged in misconduct and malfeasance, paid themselves excessive commissions, created entities without regard to their effect on her taxes and failed to document revenue and expenses and implement a proper budget.
Everything worked out of course because the pop star is reportedly worth a whopping $43 million.