10:50am PT by Ashley Cullins
'Wolf of Wall Street' Inspiration Jordan Belfort Files $300M Fraud Lawsuit Against Red Granite
Leonardo DiCaprio's turn as Jordan Belfort in The Wolf of Wall Street earned him a Golden Globe and an Oscar nomination, and the film is Martin Scorsese's biggest box office hit to date, but the pic has been plagued with legal trouble — including an international crime scandal — and the real-life Belfort isn't happy with how that has affected his pocketbook.
Belfort on Thursday sued Red Granite for $300 million. The Stratton Oakmont co-founder, who spent 22 months behind bars and was ordered to pay millions in restitution after pleading guilty to securities fraud and money laundering charges in connection with the events depicted in the 2013 movie, says he never would have sold the rights to his memoir to the producer if he knew the film was funded with dirty money.
Belfort says he was told Red Granite was financed by legitimate high-net-worth individuals and companies, including Goldman Sachs. Since he signed over his rights in 2011, he's learned that wasn't the case.
The rights were purchased and the film was funded with cash from the 1Malaysia Development Berhad, known as 1MDB, according to the complaint. Red Granite co-founder Riza Aziz is the stepson of embattled former Malaysian Prime Minister Najib Razak, who is accused of siphoning $700 million from the government-run 1MDB fund into his personal bank accounts. Authorities also discovered more than $4.5 billion was taken from the fund by Jho Low, who was later linked to Red Granite, and other high-level officials. Aziz, Razak and Low (currently a fugitive) are all facing potential jail time in Malaysia.
Meanwhile, the U.S. Department of Justice filed a record-setting $1 billion forfeiture complaint, which sought, among other things, all future profits from the film. The DOJ reached a $700 million settlement with Low and a $60 million settlement with Red Granite.
Because of all this, Belfort says the company is now too scared to try to further monetize the rights, and he's asking a California federal judge to void their contract.
"Belfort is significantly damaged by Red Granite’s tainting of his book/story rights, coupled with Red Granite’s inability and/or refusal to exploit and maximize the rights acquired from Belfort as required by contract, due to the highly publicized scandal and amid the allegations of their direct involvement," writes attorney Bryan Freedman in the complaint, which is posted below. "Now motivated only by self-preservation, Defendants must distance themselves from Belfort’s 'The Wolf of Wall Street' story, and other rights purchased, for fear that propagating the books/stories will only fan the flames of the criminal charges facing them."
Belfort is suing for fraud, negligent misrepresentation, violation of the RICO Act, breach of contract and breach of the covenant of good faith and fair dealing.
"One thing is clear: Prior to Mr. Belfort entering into the agreement which transferred his rights in Wolf of Wall Street, Red Granite and its principals did not disclose to Mr. Belfort that they were using funds obtained from engaging in racketeering and other criminal activity to acquire his rights," Freedman tells The Hollywood Reporter. "Had Mr. Belfort known those facts, he would have never agreed to enter into this contract. That is called fraud and, once again, Red Granite will be held accountable for its illegal activity.“
Getting that $300 million could prove impossible, given the circumstances, but if Belfort is freed of his business relationship with Red Granite, it's possible he could negotiate a new rights deal for his second memoir, Catching the Wolf of Wall Street, which according to publisher Penguin Random House tells the story of Belfort's "spectacular flameout and imprisonment."
Red Granite's lawyer Matthew L. Schwartz of Boies Schiller Flexner sent THR this statement in response to the complaint: "Jordan Belfort's lawsuit is nothing more than a desperate and supremely ironic attempt to get out from under an agreement that for the first time in his life made him rich and famous through lawful and legitimate means."
Jan. 23, 12:05 p.m. Updated with statement from Red Granite's attorney.