The new Hollywood hustle: Four charged over £1m movie scam

70 small investors were allegedly convinced to  part with cash for non-existent Van Damme movie

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The Independent US

It’s a pitch Hollywood would probably sniff at. Four men in a Los Angeles apartment cold-calling schmucks across the land to part with their cash for a film project purportedly starring the likes of Donald Sutherland, Gerard Butler and Jean-Claude Van Damme, which will never be made. People aren’t that dumb.

But it shouldn’t be sniffed at. It is, after all, only a variation on the themes explored for real in American Hustle and The Wolf of Wall Street, two actual – and successful – films in contention for statuettes at the Oscars.

The real-life version involves four men allegedly setting out to do exactly as described. Never mind that anyone with an ounce of sense knows that putting money into a yet-to-be-made movie is about as unsafe an investment as you could make. But apparently, if the lie is bald enough and the phony cast list dazzling enough, foolishness takes over.

Prosecutors in Los Angeles allege that starting in 2010 a company named Mutual Entertainment LLC reeled in $1.7m (£1m) by convincing 70 small investors on the phone that it was in final development of a film set in Paris during the Second World War named variously Marcel and The Smuggler with Van Damme in the lead role.

The company’s co-founders, Samuel Braslau, 53, and Rand Jay Chortkoff, 64, both of Los Angeles, have been charged with fraud and could face up to 20 years in prison.

Also charged are two others who helped work the phones for them. Meanwhile, civil charges have also been filed by the Securities and Exchange Commission (SEC). The accused “sold investors on the Hollywood dream”. Michele Wein Layne, director of the SEC’s Los Angeles regional office, said. “But the dream never became a reality because they took investors’ money for themselves rather than using it to make a movie.”

According to prosecutors, the victims of the scam were told that their investment would carry “minimum risk”, that filming on the project was due to begin in the middle of 2013, and that other stars such as Jon Voight and John Cusack were also “contracted to appear” in it. As additional reassurance, they were allegedly told that Mutual had had previous successes including with the Harold &Kumar movie series.

This, moreover, appears not to be an isolated incident. Also arrested last week were two other men behind a separate company called C22 in Los Angeles that had allegedly been running a similar fraud involving another phantom film about wrestling called Beyond the Mat.

“While one movie script was written, no movies were ever actually produced,” the US attorney’s office said. “The glamour associated with Hollywood and movies is something that really hooks people in,” Assistant United States Attorney Ellyn M Lindsay told The Daily Beast news site.

 “What’s scary is that older people and people who really can’t afford it are putting their life savings into this because they’re told it’s safe, and of course it’s not.

“This is a long-lasting scam that’s been going on for at least 10 years. There were multiple boiler rooms in the Los Angeles area that are pulling this movie-investment scam, and we’re only able to go after some of them since it’s just so prevalent.”

Prosecutors say the four men at Mutual were almost found out in late 2011 when regulators in Alabama got wind of their cold-calling and filed an order against them. They allegedly responded, however, by changing the name of the company to Film Shoot and switching the film’s title from Marcel to The Smuggler and then carried on with their business.

Mr Braslau, who was arrested on Thursday, has pleaded not guilty to the charges. It wasn’t clear if the same plea had been made by Mr Chortkoff who was also taken into custody.