In a lawsuit filed Monday, Merrill Lynch Mortgage Capital and Bank of America accuse Stephen P. Jarchow and Regent Releasing of defrauding them out of $90 million by obtaining loans based on shell companies and fake licensing deals for films and TV series.
Plaintiffs “believe that defendants committed deliberate acts of fraud and self-dealing … and schemed to funnel loan proceeds to themselves through a series of sham transfers and transactions with affiliated parties,” the firms allege in their suit, filed in Los Angeles Superior Court.
Merrill Lynch says it advanced $50,000,000 under each of two loan facilities to cover the acquisition of film rights and subsequent P&A costs.
Properties involved in the litigation include 2007’s “The Cut Sleeve Boys” and TV series “Dante’s Cove Season 3.”
Founded by Jarchow and Paul Colichman, Regent has produced titles including “Gods and Monsters.”
Suit alleges that “sham documentation” between several of the shell companies was used to obtain loans from both banks that were never repaid. Suit says the agreements “gave the appearance that the films being financed were contractually entitled to a fixed revenue of a certain amount.”
Jarchow said he had not yet read the entire complaint and could not yet comment in detail. “Basically, Merrill Lynch is unhappy with the deal they made five years ago, and this is their way of expressing it,” he said, adding that he believes he and Regent have complied with the terms of the agreement.
Also named in the suit were Convergent Funding, Studios Funding, Regent Studios, Regent Worldwide Sales, Here Networks, Family Media Home Entertainment and Liberation Prods. Intl.