Goldman Sachs Countersues Producer Joel Silver Claiming Fraud (Exclusive)
The banking giant and the "Sherlock Holmes" producer are embroiled in litigation over an alleged $30 million deal gone awry.
Producer Joel Silver scored a small victory in his bold lawsuit against investment bank Goldman Sachs over financial arrangements relating to his Dark Castle label when a judge in May refused to dismiss the multimillion-dollar case.
But now Silver, the man behind the Matrix films and Sherlock Holmes is on the defensive in the ongoing Hollywood-vs.-Wall Street smackdown.
We've learned that Silver has been countersued by the banking giant, which claims Silver made deliberately false and misleading representations in order to fraudulently gain tens of millions of dollars in upfront cash payments.
The dispute concerns agreements made in 2007, when Wall Street was eager to put up substantial sums for various slates of Hollywood movies. That year, Silver began talking to Goldman, which was in the midst of buying parts of Alliance Films, the Toronto-based TV/film producer and distributor.
Allegedly, Silver introduced Goldman to his financing connections to make the Alliance deal happen, and the parties are said to have come to an agreement whereby Silver would be paid $35 million (later reduced to $30 million) in exchange for a share of revenue from a slate of movies made by Dark Castle, a genre division of his Warner Bros.-based Silver Pictures.
Silver said in a lawsuit filed last year that he agreed to wait on his payment until the Alliance deal was fully financed, but after the market headed south in 2008, Goldman repudiated its contractual obligations and never paid him the alleged $30 million owed.
In May, a federal judge denied Goldman's motion to dismiss Silver's lawsuit for breach of contract, fraud and other causes of action. Since then, Goldman has been ramping up a counteroffensive that goes well beyond merely calling Silver's lawsuit "implausible" and "absurd."
In July, Goldman hit Silver with counterclaims based on alleged representations by Silver's companies to make the deal happen. Silver is now being sued for "deliberately and fraudulently" overstating the anticipated performance of the 15 films in the Dark Castle slate.
The producer is said to have commissioned a report in 2007 from the Salter Group, which valued a 62.5% interest in the movies' profits at somewhere between $62.4 million and $77.3 million, before taxes. The prospect of turning a profit by purchasing a percentage of the slate is said to have lured Alliance and Momentum into making the deal.
Goldman now says that Silver didn't actually believe the projections because they were based on assumptions that were unrealistic and incorrect.
"In fact, on information and belief, the entire Dark Castle Slate has generated no net profits, and any interest in the Slate Net Profits has been worthless," says the counterclaims filed by Goldman. The investment bank goes on to say that had its entities known that Silver's "sole objective was to convert their worthless future profit participation rights into an upfront lump sum payment of tens of millions of dollars," they never would have continued negotiations.
Silver is being countersued by Goldman, Alliance Films and Momentum Pictures for fraud and negligent misrepresentation. The counterclaimants demand compensatory and punitive damages, rescission of the written agreement, and further relief.
Two weeks ago, Silver filed an answer to these claims. Here's his argument, according to court papers:
"It is inconceivable that Goldman -- one of the world's foremost investment banks, with vast resources and virtually an army of analysts at its disposal -- or any of its subsidiaries or affiliates failed to engage in any independent analysis or to otherwise verify any and all aspects of a potential transaction with the Silver Parties, or that they could have reasonably relied simply on any 'assumptions,' 'models,' 'projections' or 'estimates' of any kind provided by the Silver Parties without their own due diligence, investigation, and analysis in evaluating and determining whether to enter into the potential transaction."
- Jon Stewart Says The U.S. Is 'Like The Oprah Of Middle East Weapons Systems!'
- Teen Cosplayer Sexually Assaulted And Beaten Near Comic-Con, Police Say
- Nathan Fielder's 'Dumb Starbucks' Episode Finally Airs, And It's Genius
- Justin Bieber And Orlando Bloom Maybe, Possibly Just Had The Lamest Fight Ever