The producer of a film at the center of an alleged investment scam said he was shocked to learn that people he thought were helping bankroll his film were being indicted by the Justice Department.
The department charged six people and arrested five of them Thursday for allegedly seeking investors for films they didn’t really intend to fund. Kase Chong, producer of the completed film “Beyond the Mat,” told TheWrap he was stunned to hear that his supposed backers had been charged with fraud — and remained “optimistic” the film can still be released.
“We thought we had distribution,” said Chong, whose film has screened privately at several festivals. “Things seemed to be going in the right direction.”
Chong said he was trying to gather all the facts on Friday.
The defendants allegedly told investors that they could see huge returns if the films were even modest hits, the Justice Department said. The six are accused of costing their victims millions.Also read: ‘Wolf of Wall Street’ Broker Sues Producers for $25 Million Over Bald Jokes, Hooker and Drug Scenes
The five men who were arrested pleaded not guilty in an arraignment, and the sixth is a fugitive.
The allegations are detailed in two indictments filed Thursday. The first involves company Mutual Entertainment LLC, later renamed Film Shoot LLC. Prosecutors say the company falsely dangled the promise that John Cusack, Gerard Butler and Jon Voight might star in a film called “The Smuggler.”
They are accused of bilking investors in “The Smuggler,” which was previously called “Marcel.” The indictment accuses the four men of raising money for the film through boiler-room telemarketing after first representing themselves as independent “surveyors” from a national research firm.
The Mutual Entertainment/Film Shoot defendants are accused of persuading 60 investors across the nation to invest $1.8 million in the movie, which was never produced.
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In 2011, the Alabama Securities Commission filed an administrative order against the company and one of the defendants, saying the defendants had failed to comply with Alabama law. The indictment said they responded by changing the name of the company from Mutual Entertainment to Film Shoot, and the name of the movie from “Marcel” to “The Smuggler.” The Securities and Exchange Commission also filed a civil lawsuit that alleges Braslau, Chortkoff and Rawiit defrauded investors.
The second, 19-count indictment accuses the operators of another company, C22 in the San Fernando Valley, of mail fraud, wire fraud, and attempted wire fraud as they raised money for “Beyond the Mat” — even though prosecutors say they didn’t intend to use the money to fund the film.
Still, Chong said, C22 was helpful in some ways, including helping the film find an editor. Chong’s credits include working on the television shows “My Fair Brady” and “Flavor of Love.”
The C22 defendants are Mack Machen, 70, of Sunland, and Anthony David Millan, 37, of Chula Vista, the CEO. Millan was arrested early Thursday and Machen turned himself in Thursday afternoon.
According to the indictment, the C22 defendants and their telemarketers made cold-calls in which they told the victims their money would be used to provide short-term “bridge loans.” Later, they began soliciting investments in “Beyond the Mat,” authorities said. The indictment alleges that the defendants issued promissory notes and promised returns of up to 13 percent per year.About 80 victims lost a total of more than $3 million, according to the indictment.
In late 2011, the California Department of Corporations issued a Desist and Refrain order that directed C22 to stop doing business due to its fraudulent practices. The indictment alleges that the defendants continued to conduct their business under a different name.