‘Rust’ Tragedy Raises Questions About Indie Producers’ Lack of Experience, Oversight

In 2016, Kelly Grimsley was vacationing in Los Angeles when she was invited to lunch with a family friend. The lunch turned out to be a pitch meeting for an investment in an independent film, and Grimsley ended up putting in $250,000 to get it made.

Grimsley would later sue the producers — Ryan Smith and Allen Cheney — claiming they had improperly embezzled $40,000, some of which went to pay a personal credit card bill and health insurance premiums.

The suit portrays Smith, 36, and Cheney, 33, as being in well over their heads, ultimately having to be rescued by Cheney’s father, the CEO of a local bank. The complaint describes the pair as “fledgling film producers with virtually no creative or business achievements in the film industry.”

Smith and Cheney are in the spotlight because they were also a producer and executive producer, respectively, on “Rust,” the Alec Baldwin film that shut down production after the cinematographer, Halyna Hutchins, was shot and killed on set Thursday near Santa Fe, N.M.

The incident has shone a light on how crews can sometimes face slipshod working conditions on low-budget independent films, with allegations that “Rust” producers hired non-union crew to replace camera workers who walked off the production, as well as allegations about poor safety practices.

A third person involved in “Rust,” executive producer Emily Salveson, 36, also got into the business relatively recently with support from her father, an attorney experienced in tax credit financing. Salveson has made extensive use of Section 181, a provision of the tax code that allows wealthy people to write off their investments in low-budget films.

“Rust” had a dozen credited producers and executive producers, including Baldwin and Matt Delpiano, his former CAA agent who is now a manager at Cavalry Media. It is not yet entirely clear who was actually in charge of hiring the crew and making sure conditions were safe.

In a statement issued Tuesday night, “Rust” producers responded to a New York Times story raising the possibility that criminal charges could be coming. Santa Fe County D.A. Mary Carmack-Altwies told the Times “we haven’t ruled out anything” and that her office’s investigation will take weeks, if not months.

“None of the producers of ‘Rust’ have been contacted by the New Mexico District Attorney’s office, We will continue to fully cooperate with any and all law-enforcement investigations as they work through the details of this heartbreaking tragedy,” according to a statement sent by a representative for producers of “Rust.”

“Rust” was shot under the low-budget theatrical agreement with the International Alliance of Theatrical Stage Employees. It was a “Tier One” production, with a budget between $2.75 million and $7.5 million, which is the lowest budget category in the contract except for “ultra-low” budget films. “Rust” was budgeted in the $6 million-$7 million range.

Baldwin was involved with many of the same producers — including Salveson, Smith and Cheney — on “Supercell,” a low-budget film about storm chasers that shot in Montana earlier this year. One question that lingers over the production of “Rust” is why Baldwin, an A-list actor, would involve himself in such low-budget fare with relatively inexperienced producers.

In an interview with the Hollywood Reporter in June, Baldwin explained that he only had to do one week of shooting on “Supercell,” which allowed him to spend more time with his six young children.

“I’m going to stay home with my family and whatever work I can find that allows me to stay home, that’s what I’m likely going to do,” he said at the time. It’s unclear how extensive Baldwin’s role was on “Rust.”

Grimsley’s lawsuit was filed in June 2017, and dismissed a few months later. In it, she states that Smith and Cheney were looking to make a movie about Cheney’s grandfather, who led a musical troupe in rural Georgia. She said she agreed to invest on condition that she got to approve any expenditures on the project. But in February 2017, she noted that numerous transfers had been made out of the project’s account without her permission. When confronted, Cheney initially blamed a “bank error,” according to the complaint, which Grimsley described as a “bald-faced lie.”

Grimsley alleged in her suit that in a subsequent meeting at the bank, Cheney’s father stated, “if the transfers weren’t illegal they were the dumbest thing I’ve ever seen.” Cheney’s father later forced his son to sell his stock in the bank to repay the funds, according to the suit.

Michael Ross, an attorney who represented Smith and Cheney in the case, declined to comment.

“It’s ancient history,” he said.

Smith joined Salveson’s company, Streamline Global, in 2018 as its president. Salveson is listed as the company’s CEO and founder.

Salveson has appeared at a number of industry events to talk up the company’s investment model, which relies heavily on Section 181. The tax code provision — which was renewed last year as part of the CARES Act — allows investors to deduct their investment in a film project, up to $15 million, at the time the money is spent.

When combined with state tax incentives — such as the 25%-35% credit awarded in New Mexico — investors can recoup most of their money before the film is even distributed.

Hal “Corky” Kessler, an attorney who has worked extensively on Section 181 productions, helped Salveson get her start in the industry a few years ago. He said that those who are involved in financing are often not equipped to take on the role of a true producer, who is responsible for actively overseeing the production.

“This was a nightmare waiting to happen,” Kessler said. “People who put money and have not had experience doing the jobs they have titles to should not do them. I don’t know what she did or didn’t do. I don’t speak ill of her. But at the same time, the questions have to be asked. Why did they get rid of the union people? There is something strange about this whole thing.”

In public appearances, Salveson has sometimes appeared to take credit for originating the use of Section 181 financing. In 2017, she appeared on a panel at Cannes with Kessler as the moderator.

“When I created this financial model, I thought is there a way to make it so that the profits of the film are not what defines whether the investor makes money or not?” she said at the time. “With 181, it doesn’t matter whether the film is fully completed. The investor still gets their benefit on day one.”

(Pictured: Emily Hunter Salveson and Ryan Smith)

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