Calabasas, CA movie distributor sentenced for independent film financing fraud

LOS ANGELES (BNO NEWS) – A Calabasas, California movie distributor was sentenced to nearly four years in prison for a $7 million fraud scheme related to the financing of independent films, prosecutors announced on Wednesday.

Harel Goldstein, 49, pleaded guilty to bank fraud in relation to a scheme to defraud Comerica Bank about 10 years ago. He was sentenced to 46 months in prison. Goldstein initially cut a deal with the prosecution to cooperate in the investigation but he lied to special agents with the Federal Bureau of Investigation (FBI).

Goldstein falsified “Deal Memos” and “Notices of Assignment,” which intended to show that foreign distributors of independent films were willing to pay for distribution rights before the movies were produced. Typically, these documents were the result of pre-production pitches made to foreign distributors by sales agents like Goldstein at film markets and events such as the Cannes Film Festival.

Such commitments, usually in the form of “Deal Memos,” were presented to a bank as collateral to secure loans to finance film productions. Goldstein and others forged at least $7 million worth of such false documents and then presented them to Comerica Bank, which awarded more than $35 million in loans to produce six films featuring actors such as Peter O’Toole, Casper Van Dien, Alicia Silverstone, Treat Williams, Natasha Henstridge and Leslie Nielsen.

During the 2001 Cannes Festival the scheme was discovered. Goldstein blamed Canadian producer Gary Howsam, as the head of the fraudulent operation and entered an agreement with the FBI to cooperate in the investigation.

Goldstein wore a recording device to a dinner meeting with the producer in which details relating to the scheme were discussed. Based on information provided by Goldstein, much of which was corroborated by the recording, the producer was indicted by a federal grand jury on bank fraud charges.

During his trial, Howsam claimed that he was not the planner of the fraudulent scheme and after some investigation; FBI agents concluded that Goldstein was the individual who planned the scheme without Howsam’s knowledge. The indictment against the producer was dropped and Goldstein was convicted.

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