Entertainment Legal News

Defendants Sentenced in Metropolis Premiere Entertainment Investment Scam

Bench Warrant Issued for Fugitive Defendant who Fled to Germany

Los Angeles, August 15, 2000 --The California Department of Corporations, in cooperation with the Los Angeles District Attorney’s Office, today announced that defendant Scott Steven Engel was sentenced in Los Angeles Superior Court on August 11, 2000, in connection with an entertainment investment scam referred to the District Attorney by the department. The court issued a bench warrant for a second defendant, Thomas Leonard Beirith, who has reportedly fled to Germany.

Operating under the name Metropolis Premiere, Inc., the defendants pled no contest to multiple counts of securities fraud and grand theft. Defendant Engel appeared for sentencing and was ordered to serve 90 days in jail and five years probation and to make full restitution to all known investors. The court issued a bench warrant for the arrest of Beirith, ordered that his $150,000 bail be revoked along with his negotiated plea to two years in state prison. In addition, the court ordered that defendant Beirith be subjected to the maximum sentences on the counts to which he pled guilty, and that he, along with defendant Engel, make full restitution to all known victims.

The defendants claimed to have business connections with Alan Ladd, Jr. and Arnold Schwarzenegger, and to be involved in development of sequels entitled "Terminator 3" and "Independence Day 2000." They falsely claimed that Schwarzenegger was on their Board of Directors. Ladd and Schwarzenegger cooperated in the investigation and a sting in which investigators posed as interested investors. The investigators recorded the defendants making fraudulent statements about the prospective movie deals on audio and video equipment hidden in a lawyer’s office.

The elaborate investment scam targeted Pepperdine University students, alumni and other prospective investors. The defendants solicited investment funds in amounts up to $5 million for various movie deals. Metropolis Premiere claimed to have been involved in creating the special effects for such movies as "True Lies"and "Terminator II" and to have won an award for the special effects in "Titanic." Investment opportunities were also offered in real movie productions such as "Godzilla" and "With Wings As Eagles" that the defendants claimed to be producing or financing.

Entertainment investment scams are on the Department of Corporations’ top-ten list of the most popular investment scams in today’s investment marketplace. To see a complete list of investment scams, click-on the "Investor Education" button found on the department’s website www.corp.ca.gov. Investors should be wary of pitches that include names of big stars and promises that investors can "get in on the ground floor" of the next big box office movie, maybe "the next Titanic." Although many movie productions are successful, for every one that is successful there are many more that lose money.

In July 1999, the department announced a sweep of illegal and fraudulent entertainment investment offerings on the Internet that resulted in the issuance of 23 Desist and Refrain Orders and the filing of one civil action. The offerings had sought to raise over $2.1 billion in capital for film productions all over the world. California is the home of many successful Internet and entertainment companies, and their popularity and success have spawned a large number of illegal and fraudulent offerings of investments in entertainment products via the Internet and other marketing media.

The mass marketing of entertainment products has made it possible to market these entertainment investments to tens of millions of potential investors with a few keystrokes. These offerings are particularly risky because of the difficulty in verifying the facts and financial assumptions and projections.

The department acknowledges the outstanding work of Deputy District Attorney Richard Wilson and the Los Angeles District Attorney’s Office, and the excellent working relationship of the two offices in bringing the matter to a successful conclusion. The two agencies will work together to bring the fugitive back to California for sentencing.

The Department of Corporations is California's Investment and Financing Authority, reporting to the Business, Transportation and Housing Agency and the Governor. The Department is responsible for the regulation, enforcement and licensing of securities, franchises, off-exchange commodities, investment and financial services, independent escrows, consumer and commercial finance lending and residential mortgage lending. For further information or to obtain a complaint form, see the Department's Web site at www.corp.ca.gov.

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	Did You Know?
	The title of Option is a defined factor When a creative entity, such as producer, artist, or studio, discovers a property and evaluates the rights status, they will, in most cases, attempt to negotiate an 'option' for the rights. An option is the right to acquire ownership of an intellectual property for a pre-determined amount of time. Size of the option payment often determines length of the agreement as well as how many forms of the rights will be included in the deal. While most option payments are subject to negotiation, script deals often work out to an even percentage of the purchase price.