Steve Mnuchin Accused of Fraud in New $110 Million Relativity Media Suit

Secretary of the Treasury candidate, Ryan Kavanaugh targeted by RKA Film Financing

Last Updated: February 3, 2017 @ 6:05 PM

Donald Trump’s Treasury Secretary nominee Steven Mnuchin has been named in a fraud lawsuit by financing company RKA Film Financing, stemming from his days as a board member of the now-defunct Relativity Media.

The company, which has a long and contentious legal history with former Relativity CEO Ryan Kavanaugh, filed an updated claim on Thursday about the “repeated misrepresentations about an illusory investment opportunity” in the studio behind films like Henry Cavill’s “Immortals” and the recent Zach Galifianakis comedy “Masterminds.”

In a claim filed in New York State Supreme Court, RKA said that Relativity borrowed money for P&A — prints, advertising and other costs related to promoting the release of its movies — and then used those funds instead to finance operations and pay executive bonuses. It is seeking $110 million in damages.

Mnuchin is named alongside seven other individuals.

“In reality, all of the Defendants knew that Relativity was a failing enterprise, and that, rather than financing P&A expenses, the P&A Facility was always intended to, among other things: pay salaries and bonuses of Relativity personnel, its contractual debts, and its other general corporate expenses,” the papers said.

Representatives for Mnuchin and Kavanuagh did not immediately respond to requests for comment.

RKA’s three rounds of investment in Relativity came over the course of a harrowing bankruptcy saga, in which the studio attempted to release films such as Kate Beckinsale’s “The Disappointments Room,” Halle Berry’s “Kidnap,,” Kate Bosworth’s “Before I Wake” and “Masterminds.”

“Kidnap” and “Before I Wake” are still unreleased, which is the basis for RKA’s claims that their funds have not been applied to release campaigns.

The suit also alleges the Relativity financier Colbeck Capital was given priority to “decrease their financial exposure in the event of Relativity’s financial demise.”

The amended suit claims fraud, fraudulent inducement, and negligent misrepresentation.