Movie Distributor Sentenced to Nearly Four Years in Prison in $7 Million Independent Film Financing Fraud

LOS ANGELES—A Calabasas man who orchestrated a fraud scheme related to the financing of independent films that caused Comerica Bank to suffer more than $7 million in losses was sentenced today to nearly four years in federal prison.

Harel Goldstein, 49, who previously pleaded guilty to bank fraud in relation to the scheme that bilked Comerica Bank about 10 years ago, was sentenced to 46 months in prison by United States District Judge S. James Otero. In issuing the sentence, Judge Otero noted that Goldstein initially agreed to cooperate with the government’s investigation into the scheme, but then lied to special agents with the Federal Bureau of Investigation and prosecutors at the United States Attorney’s Office.

Goldstein’s fraud involved falsified “Deal Memos” and “Notices of Assignment,” which purported to show that foreign distributors of independent films were willing to pay for distribution rights before the pictures were produced. Typically, these documents were the result of pre-production pitches made to foreign distributors by sales agents like Goldstein at film markets and events such as the Cannes Film Festival. The commitments from the foreign distributors, usually in the form of signed “Deal Memos,” would be presented to a bank as collateral to secure loans to finance film productions. In his scheme, Goldstein and others simply forged at least $7 million worth of false Deal Memos and Notices of Assignment, presented them to Comerica Bank, and as a result obtained more than $35 million in loans to produce six films featuring actors such as Peter O’Toole, Casper Van Dien, Alicia Silverstone, Treat Williams, Natasha Henstridge and Leslie Nielsen.

Several years after the scheme was discovered during the 2001 Cannes Film Festival, Goldstein entered into a plea agreement with the government and promised to cooperate in an investigation of others involved in the scheme. As part of his cooperation, Goldstein claimed that the scheme had been the brainchild of an independent film producer, and, to prove the involvement of the producer, Goldstein wore a recording device to a dinner meeting with the producer in which details relating to the scheme were discussed. Based on information provided by Goldstein, much of which was corroborated by the recording, the producer was indicted by a federal grand jury on bank fraud charges that alleged he bilked Comerica Bank.

However, as the government later determined, the scheme to defraud Comerica Bank was in fact Goldstein’s idea and was started without the producer’s knowledge. When prosecutors learned that Goldstein had provided false information about that and other matters, the indictment against the producer was dismissed. Following the dismissal, Goldstein entered into a new plea agreement that called for a higher sentence and in which Goldstein acknowledged that he had obstructed justice by lying to the FBI and prosecutors. During today’s hearing, Judge Otero sentenced Goldstein to the high end of the sentence range contemplated in the second plea agreement.