10:58am PT by Eriq Gardner
Prosecutors Say Telemarketers Duped Old Folks Into Investing $25M Into Indie Films
Federal prosecutors have indicted 18 individuals accused of conducting a boiler-room telemarketing operation that allegedly took $25 million from the elderly.
The indie film realm has been subject to allegations of duping investors in the past, but perhaps never like this. According to Assistant United States Attorney Stephen Cazares, the alleged fraud took place in southern California and Florida. Between 100 and 200 telephone operators cold-called old folks and induced them to put up money for films. The investors were promised returns "up to 1000 percent," as well as film credits. They were allegedly shown "shiny, glossy marketing materials" touting revenue already earned from product placement deals.
Some of the money went to Cinamour Entertainment, which created several films, including From Mexico With Love and Red Water: 2012. Investments were also solicited for Q Media Assets for a pair of films, Way of the Dolphin and Eye of the Dolphin.
However, it is charged that telemarketers falsely promised that 93% of the money raised would go into production and promotion, but that more than a third of the money ended up in the pockets of the telemarketers. Cazares says the "heart of the case was the failure to disclose commissions or the true use of the money."
Law enforcement have already arrested 11 individuals from the operation, including Daniel Toll, the president of Cinamour.
Prosecutors also say they have obtained a guilty plea from a former CIA agent who headed Q Media over charges of conspiracy, mail fraud and tax charges.
Some of the individuals who have been charged with crimes are accused of encouraging investors to liquidate individual retirement accounts. These defendants are now facing trials for conspiracy, wire fraud, and money laundering.