March 12, 2014 — Profiteers who dupe investors into pouring their money into glamorous-sounding investment scams should be stopped. But the government simply does not have the resources to catch them all. That’s why federal authorities collaborate with company insiders under the financial fraud whistleblower program set up by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Tipsters who notify the Securities and Exchange Commission (SEC) about fraudulent scams that harm investors may be handsomely rewarded. Informants receive as much as thirty percent of the amount the government recoups, so long as the total recovery exceeds $1 million.
Movie Investors Lured with Promises of Movie Stars, Action Figures and Big Dollar Returns
Three California residents have been charged in a movie investment scam purportedly involving famous movie stars and big-screen investment returns.
Samuel Braslau, a Los Angeles lawyer, allegedly orchestrated the scam using two separate companies — Film Shoot LLC and Mutual Entertainment LLC. In 2011, Mutual Entertainment bought the movie rights to an unpublished World War II story set in Paris and then began recruiting investors for the purported project in a boiler room operation run by
Rand Chortkoff in Van Nuys. Stuart Rawitt was a high-pressure salesman who allegedly helped to dupe over 60 investors to sink $1.8 million in the movie project.
Investors allegedly were lured with all sorts of false promises. They were told that Jean-Claude Van Damme and Donald Sutherland would have roles in the firm, though neither actor was even approached about such work. Rawitt claimed that investors would realize a 300 percent return on their investment though the projection was baseless. He boasted that sales of film-related action figures would generate big returns for investors despite the fact that no licensing rights existed. Investors were also told that 63.5 percent of the money raised would be spent on production expenses. Instead, the three men used most of the funds to pay commissions to their salesmen and bogus consulting fees to themselves.
The SEC has charged Braslau, Chortkoff, and Rawitt with several securities violations and is seeking monetary penalties as well as permanent injunctions. A parallel criminal action has also been filed.
Whistleblowers Alert SEC to Outrageous Investment Scams
Insiders who uncover information about illegal boiler room scams to defraud investors need to understand the Dodd-Frank whistleblower program before they notify the government. Located in Los Angeles, where the alleged fraud in this case occurred, as well as Dallas and the Washington D.C. area, the SEC fraud attorneys at Waters & Kraus have the experience needed to protect tipsters’ rights. Contact us by email or phone our financial fraud attorneys at 855.784.0268 to discuss how we can work together to do the right thing.