Nov. 24, 2009— -- It's a familiar Hollywood script with a twist.
Nicolas Cage is being sued by his former business manager, Samuel J. Levin, who claims lavish spending, not his advice, is to blame for the actor's financial meltdown.
In the suit, filed in Beverly Hills, Calif., Nov. 12, Levin is seeking a declaration that he acted properly and that he didn't excessively charge Cage for his services. He also claims he is owed $129,000 for work he did after he was let go in 2008.
The action was a countersuit to the suit Cage filed against him a month earlier, alleging fraud and seeking $20 million.
Cage's attorney, Marty Singer, said it was ultimately up to Levin to properly manage Cage's finances.
"You're a business manager," Singer told The Associated Press recently. "You need to say no."
Unsophisticated in finance and unwilling or unable to monitor their investments properly, many of the biggest stars in entertainment have turned their financial affairs over to advisors or wealth managers. Most have seen their investments grow along with their wealth. Others, though, are left demoralized, dismayed and angry after watching their fortunes tumble into financial ruin.
But financial experts say the Cage case poses an important legal question: Who is ultimately at fault when a stubborn Hollywood star with a taste for excess ignores the advice of a hired financial professional?
"A money manager or financial advisor can have wonderful financial advice for a client," said Michael Eisenberg, a Los Angeles financial advisor whose roster of clients includes many in the entertainment industry. "But ultimately it is the responsibility of the client to make spending decisions and essentially keep an eye on his finances."
Disgruntled clients suing their money manager after a financial collapse isn't new, of course. But the Cage case underscores just how a client with lots of money to burn can still find himself in debt. Cage's films credits include "Leaving Las Vegas," "Con Air" and other top-grossing movies.
Veteran financial advisors and money managers contacted by ABC News were reluctant to weigh in on the Cage case specifically, but most said financial problems like these often occur when a client is neglecting his financial affairs.
"Even if you have a financial professional overseeing your investments, it's important to keep an eye on your cash flow and take responsibility for your own finances," said Bradley Ducoat, a Boca Raton, Fla., financial planner. "That's particularly true for wealthy individuals with a broad set of investments."
Cage's alleged spending habits are legendary even by Hollywood's outsized standards. The actor in 2007 alone bought $33 million in property, 22 automobiles and nearly 50 pieces of expensive jewelry, art and other exotic items, according to Levin's lawsuit.
Tough Financial Times
In court papers, Levin said he tried to warn Cage when he was hired in 2001 that Cage was outspending even his large Hollywood paychecks.
Levin claimed that he advised Cage years ago that he would need to earn $30 million a year to maintain his lifestyle.
"[Cage] knows that his losses are entirely and solely the result of his own compulsive, self-destructive spending, which he engaged in against Levin's advice," the complaint said.
Cage's attorney, Marty Singer, called Levin's claims "absurd."
Levin's court action is in response to an original suit filed by Cage in which the actor claimed he didn't find out about his financial woes until after changing business managers in 2008.
Cage is facing tough financial times and has been forced to sell some of his property, according to his original court filing against Levin. The Internal Revenue Service has filed more than $6.6 million in tax liens against the actor this year.
With the exception of a few savvy performers, celebrities have long been known to be incredibly naive about investing. Some have been fleeced in fraudulent schemes, while others have gotten into ill-advised investments.
Annie Leibovitz has earned millions of dollars photographing some of the world's most famous faces. But she has struggled to stay out of debt. Last year, Leibovitz was forced to put up several homes as well as copyrights to all her photos to secure a $24 million loan with Art Capital Group.
Actor Stephen Baldwin, brother of Alec Baldwin, filed for Chapter 11 bankruptcy protection in New York in July. The court documents show that the 43-year-old actor and his wife, Kennya, owed more than $2 million, according to Reuters.
And before his death, Michael Jackson, one of the most successful, visible and influential pop singers in history, was overextended financially to the point of near collapse.
"When things are going well and money rolls in, entertainers don't usually take the time to properly analyze their investments," said Richard Orenreich, a Las Vegas entertainment attorney with several show business clients. "It's easy to spend the money, but the smart ones take time to look closely at how their money is being invested."
A Struggling Economy
Ducoat said high-earning celebrities aren't the only ones overextending themselves financially.
"This is unfortunately a financial situation many people are finding themselves in right now as the economic situation struggles," he said. "A lot of people simply don't realize that spending needs to be reduced when times are bad."
The Cage legal case echoes a court action several years ago involving singer Billy Joel and his one-time manger, Frank Weber.
In a $90 million suit filed in a New York court, Joel claimed that Weber gave himself interest-free loans from the entertainer's funds, improperly charged commissions, and lost $10 million in high-risk investments in horse-breeding partnerships, oil deals and real-estate.
Weber countersued the singer, claiming that he was fired without cause and that Joel agreed to the loans and investments.
In that case, Joel eventually won a $2 million partial summary judgment against Weber in New York Supreme Court. A Richmond, Va., judge later dismissed Weber's $30 million counter-suit.
After the judgment, Billy Joel conceded that he and other performers don't keep a close enough eye on their money when times are good because it saps their creative energies.
"To have to translate what you do into dollars and cents makes it all mundane," he told the Washington Post. "It takes away the magic to see what the gross is and the net is, what the taxes are, to know what you earn and to see people in terms of demographics."