Investors in Screen Capital International and the Aramid Entertainment Fund are turning on film financier David Molner and suing him for $50 million in Los Angeles Superior Court.
Molner, who heads both Screen Capital and AEF, is being accused of looting the companies to finance his lifestyle.
"Molner fraudulently conspired with his cronies to use AEF as a personal piggy bank for himself and entities he controlled, issuing loans to insider entities that they never had any intention to collect upon," the suit reads.
The irony is that Molner has been the lead plaintiff in ongoing litigation against David Bergstein that accuses the film financier of raiding his own companies' coffers to much the same end.
Wimbledon, WFM Holdings and Stillwater Market Neutral Fund III are accusing Molner and his partner Tim Levy of taking over $60 million from the Cayman Island- based fund. They accuse Molner of making various insider deals and of misrepresenting the company's finances.
Molner declined to comment, and the plaintiff’s attorney D.M. Rawlings did not respond to TheWrap’s calls.
According to the suit, Molner and Levy failed to hand over company records to an independent investigator hired to look into the finances. The two executives and members of their board also refused investors' request that they resign, the suit also claims.
In addition to seeking $50 million, the investors want the court to impose an injunction against Molner, preventing him from transferring or controlling assets.
Internally, there is an active debate about whether to force Aramid into bankruptcy to recover the assets or to use the litigation as leverage to clean house at the top, according to an individual with knowledge of the suit.
The investors allege that Molner has been engaged in costly litigation to divert attention from his own mishandling of $250 million Molner raised to found Aramid. Though they don't come out and say it, that's an apparent reference to a class action suit that Molner is participating in to recover $16 million in investment funds he claims Bergstein had failed to repay.
Also named in that suit was Bergstein's business partner, Ronald Tutor, with whom Bergstein has collaborated on the $660 million deal for Miramax this July.
If successful, the big winner in Aramid investors' suit against Molner could be Bergstein, who claims that he is, in fact, the target of a campaign by to discredit him
Bergstein has argued in court motions that the suit is an attempt to disguise the fact that Aramid is in severe financial distress. Bergstein had tried to get the court to get Molner's company to pay a $25 million bond, to demonstrate it has sufficient assets to pay costs if it loses the case. The hearing on Bergstein's bond motion has been scheduled for October
The suit against Molner comes as Tutor's bid for Miramax is at a critical juncture. On Wednesday, Morgan Creek CEO James Robinson announced that he would not be participating in the Tutor-led group of investors that are trying to take over the independent studio. Robinson had been expected to contribute as much as $100 million to the purchase.
(Pamela Chelin contributed to this article.)