Jailed Schmid investigated for fraud, tax evasion

BERLIN — Unless Munich prosecutors have a sudden change of heart, Andreas Schmid won’t be attending the Venice Film Festival for the premiere of Paul Verhoeven’s World War II drama “Blackbook.”

Schmid, who bankrolled the pic through his fund VIP Medienfonds, has been in jail since October at the request of prosecutors who feared he would flee the country while they investigated him and his company on suspicion of fraud and tax evasion.

Ten months later, prosecutors are still investigating and no charges have yet been filed. Anton Winkler, a spokesman for the Munich prosecutor’s office, says the probe likely will continue for at least another one to two months, adding that a decision on whether the case ultimately will go to court must wait until the investigation is completed.

Schmid still enjoys wide support from Germany’s film industry; many local insiders believe the charges against him are either trumped-up or flat-out erroneous.

VIP has financed both international and German productions including “Stormbreaker,” “All the King’s Men” and Tom Tykwer’s “Perfume: The Story of a Murderer.”

Last year, Schmid inked a deal with Roland Emmerich to finance a slate of films, including “Trade,” German director Marco Kreuzpaintner’s upcoming pic about international slave trade starring Kevin Kline. Following Schmid’s arrest, a Munich law firm working on behalf of Emmerich examined VIP’s funding of “Trade” and found the financing scheme to be on the up-and-up.

VIP has used the same funding structure for most of its recent films. Martin Feyock, a media attorney with the firm Poll Strasser Ventroni Feyock, reckons investigators mistook VIP’s complex system of financing for an intricate scam.

VIP was on board to fully finance the projects. Since it controlled a film’s rights, it had existing distribution deals that accounted for up to 80% of the budget while putting up the remaining 20% directly. That may not have been clear to investigators, who may have assumed VIP was under-funding the film by 80%, says Feyock.

Investigators overlooked the fact that most of the budget was coming from distributors and not from VIP itself, Feyock concludes. “These financing agreements are extremely complex and they are also in English, which has made it difficult for German investigators,” says Feyock, who is confident that Munich’s regional court ultimately will throw out the case.

Winkler, meanwhile, says prosecutors are aware of Feyock’s analysis, “but we are of a different opinion.”

Regardless of the outcome, the case has severely hurt Germany’s film industry, says Feyock. “Foreign producers have come to the conclusion that the German finance authority’s funding regulations are unclear, and when in doubt, they lock people up. ‘That doesn’t happen in Romania,’ is what people are saying.”

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