Fri, 21/02/2014 - 11:59
The Securities and Exchange Commission (SEC) has charged three California residents with defrauding investors in a multi-million dollar movie project that would supposedly star well-known actors and generate huge returns.
The SEC alleges that Los Angeles-based attorney Samuel Braslau was the architect of the fraudulent scheme that raised money through a boiler room operation spearheaded by Rand Chortkoff of Encino, California.
High-pressure salespeople including Stuart Rawitt persuaded more than 60 investors nationwide to invest a total of USD1.8m the movie first titled Marcel and later changed to The Smuggler.
Investors were falsely told that actors ranging from Donald Sutherland to Jean-Claude Van Damme would appear in the movie when in fact they were never even approached.
Instead of using investor funds for movie production expenses as promised, Braslau, Chortkoff, and Rawitt have spent most of the money among themselves. The investor funds that remain are not enough to produce a public service announcement let alone a full-length motion picture capable of securing the theatrical release promised to investors.
In a parallel action, the US Attorney’s Office for the Central District of California today announced criminal charges against Braslau, Chortkoff, and Rawitt.
“Braslau, Chortkoff, and Rawitt sold investors on the Hollywood dream,” says Michele Wein Layne, director of the SEC’s Los Angeles regional office. “But the dream never became a reality because they took investors’ money for themselves rather than using it to make a movie.”
According to the SEC’s complaint filed in US District Court for the Central District of California, Braslau set up companies named Mutual Entertainment and Film Shoot to raise funds from investors for the movie project. In January 2011, Mutual Entertainment spent USD25,000 to purchase the rights to Marcel, an unpublished story set in Paris during World War II. Shortly thereafter, Mutual Entertainment began raising money from investors through a boiler room operation that Chortkoff operated out of Van Nuys, Calif.
The SEC alleges that Braslau, Chortkoff, and Rawitt claimed that 63.5 per cent of the funds raised from investors would be used for “production expenses”. However, very little if any money was actually spent on movie expenses as they instead used the vast majority of investor funds to pay sales commissions and phony “consulting” fees to themselves and other salespeople.
Rawitt made numerous false claims to investors about the movie project. For instance, he flaunted a baseless projected return on investment of about 300 per cent. He falsely depicted that they were just shy of reaching a USD7.5m fundraising goal and the movie was set to begin shooting in summer 2013. He instilled the belief that Mutual Entertainment was a successful film company whose track record encompassed the Harold and Kumar movies produced by Carsten Lorenz. And he falsely stated that investors would realise revenues from action figures and other products tied to the movie when in fact no such licensing rights had been sold.
According to the SEC’s complaint, Rawitt was the subject of a prior SEC enforcement action in 2009, when he was charged for his involvement in an oil-and-gas scheme.
“Investors can help protect themselves when approached for an investment opportunity by using the Internet to their advantage and researching the individual making the offer,” says Lori Schock, director of the SEC’s office of investor education and advocacy. “In this case, a quick search of the SEC website reveals a copy of the complaint filed against Rawitt in federal court for participating in an offering fraud as well as an order barring him from the brokerage industry.”
The SEC seeks financial penalties and permanent injunctions against Braslau, Chortkoff, and Rawitt.
Tue 31/01/2017 - 12:19
Tue 24/01/2017 - 09:51
Thu 24/11/2016 - 08:47
Thu 03/11/2016 - 14:33
Thu 16/02/2017 - 14:37
Mon, 20/Feb/2017 - 15:21
Mon, 20/Feb/2017 - 15:16
Mon, 20/Feb/2017 - 15:10
Mon, 20/Feb/2017 - 15:05
Mon, 20/Feb/2017 - 14:58
Mon, 20/Feb/2017 - 14:54