Daniel Zucker claims Gigapix never repaid loans
It doesn't always pay to follow the Yellow Brick Road.
Daniel Zucker is suing Gigapix Studios in Los Angeles Superior Court and alleging securities fraud and breach of contract over a $700,000 loan related to a planned computer-animated version of "The Wizard of Oz." Zucker claims Gigapix never repaid the money in his lawsuit.
Zucker also invested money in the film and is seeking $1.2 million in damages and attorney's fees.
Gigapix is under investigation by the Federal Bureau of Investigation, which is trying to determine whether it improperly raised funds. According to a notice on the FBI's website, Gigapix Studios Chief Executive Officer Chris Blauvelt and others received cease and desist orders from numerous state regulatory agencies, including ones in Oregon, Alabama, Washington, Colorado, and California.
A spokeswoman for the FBI did not immediately respond to a request for comment on the status of the investigation.
Zucker claims that Gigapix President David Pritchard convinced him to loan the studio money in January 2011 at 12 percent interest. In addition, he promised to provide Zucker with a 1.5 percent stake in the profits from the "Oz" film, telling him he would earn between 10 to 20 times the amount of money he loaned.
"Defendant David Pritchard represented to Plaintiff Zucker that he knew he was receiving funds that Plaintiff Zucker would need for retirement and living expenses, and that Defendant David Pritchard would pay timely [sic]," the suit reads.
Their agreement stated that the money was to be repaid in full by June 2012, but that date came and went without any payment.
"They were well funded with millions of dollars," Peter Bronstein, an attorney for Zucker, told TheWrap. "To my understanding, nobody knows where the money went."
TheWrap was unable to contact Gigapix for comment. A number for the company has been disconnected and its website appears to be offline.
Pamela Chelin contributed to this report.