Film Producers Hit with $6.2 Million Lawsuit for Racketeering

By - July 5, 2016
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The producers of the film Broken City have been accused of racketeering and defrauding investors out of millions, according to a civil lawsuit filed in LA County Superior Court.

Nemesis Finance has filed a lawsuit against Randall Emmett/George Furla Productions and also both of them as individuals for breach of contract, fraud and violating the RICO Act.

The film producers are not strangers to legal problems; they also were sued recently over the films Heist and Motor City. They also are suing the co-producers of a Tupac Shakur biopic. This has been noted by the attorney for Nemesis – Bryan Freedman, who makes this very clear in his legal complaint.

He states that the ‘unlawful and intentionally unethical conduct of the defendants’ follows a pattern that has been ‘established over the last few years with several independent producers, whom they have swindled’.

The lawsuit states that Nemesis and Emmett/Furla signed a co-financing agreement for Broken City. After the pre-sales for the film were only $17 million – $10 million less than predicted – several tense telephone calls took place and Nemesis decided to switch its role to that of a subordinated lender.

In 2011, Nemesis and Georgia Film Fund Seven, which is also an entity owned by Emmett and Furla, signed a loan deal for $5 million. A few days later, Nemesis discovered that the defendants had misrepresented to the film guilds the debt that was loaned against the pre-sales in order to cut the residual reserve they needed to deposit. Nemesis was left with a possible $1.6 million shortfall. After the financier stated its concern, Emmett and Furla both executed a personal guaranty in writing.

Freedman writes in the complaint that Emmett and Furla guaranteed to pay losses incurred by the plaintiff from any of the residuals that were payable that exceeded the residual reserve.

In 2012, the sales agent for that film – Inferno International – filed for bankruptcy and the rights for the film were assigned to Nemesis.

This started a major collections headache for Nemesis, according to the lawsuit. GFF7 defaulted on the loan in 2013, and Investor Loggalex owed more than $1.5 million to Inferno, which was a debt inherited by Nemesis. However, it discovered there was a secret side agreement with Emmett that diverted part of that money to another film.

Freedman writes in the lawsuit that the plaintiff alleges that Emmett informed several distributors of the film that they did not have to pay Inferno because of the side deals such as were made with Loggalex. Nemesis is suing for a minimum of $6.2 million in damages.

About Racketeering

Federal racketeering laws were passed due to the difficulty of prosecuting the heads of criminal cartels. Under the federal Racketeer Influenced and Corrupt Organizations Act, politicians were attempting to address loopholes that allowed some criminal leaders to duck prosecution for activities by not associating directly with people who did their criminal acts for them, and had been ordered to do so.

The RICO Act defines many criminal activities based upon the status of the organization as one that gets its income from criminal activities. No one may acquire, establish, or operate any organization that has any type of illegally obtained income. They also may not acquire or maintain any control or interest of any organization through any type of criminal activity.

State laws usually outlaw certain aspects of criminal organizations, but the federal RICO and racketeering law provides the legal force and means to break up criminal organizations that are stretched over many jurisdictions. Some of the most common federal offenses under the RICO Act are extortion, blackmail and bribery. Criminal front companies and organizations are often prosecuted under the RICO Act.

For example, any organization that derives income from any illegal activity can be subject to punishment under RICO. Some of the most common criminal organizations that are prosecuted include gambling houses and brothels. Also, any legal organization that gets some of their income through illegal activities could be subject to RICO. For instance, a bar that has a liquor license that provides the means for illegal gambling to occur could be prosecuted under RICO.

Also falling under the RICO Act are organizations that are used to launder money. This can occur even if most of the participants are not aware of the criminal connections of the organization. For instance, general contractors and waste removal companies are sometimes used to launder money. They can also have their assets seized and be shut down. They also can be liquidated in favor of owners who obey the law.

Most punishments for RICO-related crimes are in the range of 10 to 20 years. The person also will likely have to forfeit property that was obtained illegally.