Intertainment gets RICO case greenlight

Court opens way for co. to collect triple damages

Intertainment scored a victory Tuesday when a federal court allowed it to proceed with its allegations that Franchise Pictures and its principals, Elie Samaha and Andrew Stevens, were involved in a racketeering enterprise.

In allowing Intertainment to move ahead with its claims — under the Racketeer Influenced and Corrupt Organizations (RICO) Act — that Franchise improperly inflated budgets on a slate of pictures, the court opened the way for Intertainment to collect triple damages.

Intertainment attorney Scott Edelman said: “It’s almost undisputed at this point in the case that the budgets were phony. Now Franchise is facing treble damages on a $75 million claim.”

In a statement, Intertainment CEO Barry Baeres said, “We are vindicated by the conclusions reached by the judge.”

Franchise attorney Larry Stein shot back: “For purposes of a motion to dismiss, a judge must accept allegations as true. We are confident that once the true facts are presented to the court, the two remaining RICO claims will be dismissed just as the third was. I am fully confident that they will not even be able to establish their damages, let along treble damages under RICO.”

Claims dismissed

Last year, the court dismissed the claims Intertainment brought under the RICO law, but gave the company permission to refile. U.S. District Court Judge Alicemarie H. Stotler, who was reassigned the case, let the RICO claims stand after Franchise made a motion to dismiss.

In a lengthy opinion, Stotler held that sufficient facts were pled to allege a criminal enterprise among Franchise, Samaha and Stevens and a separate criminal enterprise among Franchise, Imperial Bank (now Coamerica Bank), which funded the films, and WorldWide Film Completion, the completion bond company.

Specifically, the judge noted Intertainment’s allegations that Imperial Bank and WorldWide met with Franchise, were part of the decisionmaking process regarding which movies to produce and the budgets of each film. She also noted Intertainment’s claims that the enterprise knew inflated budgets would be presented to the plaintiff and that the bank and the bond company had enough experience to recognize that the budgets were inflated.

On the other RICO claim the judge upheld, she found that Franchise, Samaha and Stevens could be a criminal enterprise even though they appeared to be one entity.