Investors say SeaWorld lied about business downturn after orca outcry. Now feds are investigating

When it debuted at the Sundance Film Festival in 2013, filmmaker Gabriela Cowperthwaite’s “Blackfish” landed like a one-two punch – both a wake-up call and an indictment.

Depicting the dangers of orca captivity to both killer whales and their trainers, the documentary followed the story of Tilikum, a 12,000-pound whale linked to the deaths of three people. The film sharpened the social stigma aimed at SeaWorld, the iconic theme park brand where the orca claimed his last victim, trainer Dawn Brancheau, in 2010.

SeaWorld has never really recovered. While trying to reinvent its brand, the company is still tangled in a complex web of litigation stemming from a public stock offering that ran parallel to the critical and commercial success of “Blackfish.”

And now the company is facing a criminal investigation.

In court documents filed last week, the U.S. Department of Justice asked a California judge to temporarily pause depositions in an ongoing shareholders lawsuit against the theme park chain. Sandra Moser, the acting chief of the DOJ’s fraud section, petitioned the court for a temporary stay while the government conducts an “ongoing federal criminal investigation,” the filing stated.

The documents indicate the investigation concerns “disclosures and public statements made by” the company and executives “regarding the impact of the ‘Blackfish’ documentary.”

Those concerns echo the allegations shareholders leveraged in the 2014 lawsuit, which accuses the company of purposely deceiving investors about the business hit triggered by the exposé. SeaWorld has previously denied any wrongdoing and is fighting the lawsuit.

The movie could not have come at a more sensitive time for the company. Until 2013 the chain – SeaWorld San Diego, SeaWorld Orlando and SeaWorld San Antonio – was wholly privately owned, most recently by the Blackstone Group, a “multinational private equity, investment banking, alternative asset management and financial services corporation based in New York,” according to the lawsuit. But the business was scheduled to go public on April 18, 2013.

In the months leading up to the initial public offering (IPO), however, “Blackfish” not only debuted at Sundance, but was acquired by CNN Films and Magnolia Pictures and scheduled for wide theatrical release. According to the shareholders suit, the company failed to mention the film by name in the legal documents and prospectus it filed before the IPO.

“Instead, SeaWorld offered only a generalized reference to the fact that accidents or adverse publicity ‘may’ potentially harm SeaWorld’s reputation, attendance and business as some point in the future,” the lawsuit claimed.

In reality, the company was waging a serious campaign – and leveraging considerable money – against the “ ‘Blackfish’ effect.”

The complaint accused the company of feeding employees lines to use regarding the film and instructing them to “dissuade family and friends” from watching. SeaWorld executives also hired a public relations firm to handle the criticism, and one executive reached out to 50 major film reviewers to discredit “Blackfish.”

In 2014, the company provided the funding for a website that also aimed to discredit the movie, and SeaWorld would also eventually task employees with infiltrating PETA and other animal rights groups.

This story was originally published August 30, 2017 at 4:06 PM with the headline "Investors say SeaWorld lied about business downturn after orca outcry. Now feds are investigating."