Steven Mnuchin Dodges Relativity Film Finance Fraud Lawsuit

A New York judge rules U.S. Treasury secretary was not responsible in fraud suit filed by lender against Ryan Kavanaugh’s studio

Last Updated: June 28, 2017 @ 12:30 PM

New York Supreme Court Justice Charles Ramos granted a motion by Treasury Secretary Steven Mnuchin Wednesday to dismiss him from a fraud lawsuit filed against him due to his role at Relativity Media, Ryan Kavanaugh’s troubled production company.

Lender RKA Film Financing first filed the suit in 2015, claiming Relativity borrowed money the film company “falsely represented” would be used 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.

OneWest Bank, which Mnuchin founded and was formerly chairman of, got involved with Relativity after lending the company $160 million, leading to Mnuchin serving on its board as co-chairman for a period of time. RKA had included Mnuchin in its complaint, alleging he and other defendants were aware Relativity was a “failing enterprise” and the P&A facility would not be used as intended.

However, Ramos did not agree with that logic and granted Mnuchin’s motion to dismiss himself from the lawsuit, which he had filed in March.

“RKA has yet to identify a specific factual misrepresentation made by Mnuchin to RKA,” he wrote. “Mere knowledge (or awareness) of Relativity’s finances is inconclusive to establish fraud absent any

Ramos did not, however, grant Mnuchin’s request to issue sanctions against RKA for costs and fees, finding no evidence of “frivolous conduct.”

Before joining Donald Trump’s cabinet — and recently divesting himself from his interests in film financing company RatPac-Dune — Mnuchin was an executive producer on dozens of Hollywood blockbusters, including “Batman v Superman: Dawn of Justice” and current summer hit “Wonder Woman.” In March, Mnuchin found himself in hot water after semi-seriously suggesting the audience at an event he was being interviewed at to see “The Lego Batman” movie, after which he wrote a letter to the government ethics office promising to be more careful in his statements.

Pamela Chelin contributed reporting to this story.