German distribution company Intertainment says it has proof that Franchise Pictures kept multiple budgets on numerous films that fraudulently inflated actual production costs.
The evidence of alleged budget inflation — the heart of a long-running legal fight between the two companies — is under seal and is the subject of a hearing scheduled for later this month in federal court in Los Angeles.
“This is nothing new,” said Franchise attorney Larry Stein. “We’ve always known there was more than one budget and they used that to try to indicate that something is wrong, but everyone knows there are multiple budgets on a film.” Stein added that both written and oral agreements between Franchise head Elie Samaha and Intertainment chief executive Barry Baeres allowed for multiple budgets. “It is unfortunate that Intertainment seeks to try this case in the media based on half-truths. Franchise chooses to try this case in the court after a full presentation of the evidence,” Stein said.
But Intertainment attorney Scott Edelman said, “Multiple budgets are more than a problem. Multiple budgets are fraud. There is no legitimate reason for Franchise to have sent Intertainment budgets with millions of dollars in phony entries for the purpose of getting Intertainment to pay 47% of those inflated budgets.”
Last year, Samaha told a reporter at the Los Angeles Daily Journal, a legal publication, that there were four budgets on each film: The highest one was given to Intertainment; a lower one was given to the bank; a still-lower budget was given to the director, and the lowest was sent to the guilds. Those comments are now the centerpiece of Intertainment’s suit. Stein said Samaha’s comments were “flippant.”
The parties have been warring since December 2000. Franchise charged that the once high-flying German entertainment company breached its output deal. Intertainment claimed that Franchise inflated budgets on the numerous films it produced for Intertainment included “Get Carter,” “The Pledge,” “Art of War,” “3,000 Miles to Graceland” and “Battlefield Earth.”