Baeres rebuts Samaha on fraudulent budgets

Exec testified that he didn't question phony budgets

Intertainment chief Barry Baeres took the stand Friday, presenting himself as an ambitious, inexperienced film distributor who was duped into paying inflated budgets by Franchise’s Elie Samaha.

Under direct examination by Intertainment attorney Scott Edelman, the boyish-looking Baeres rebutted earlier testimony by Samaha that Intertainment executives had inadvertently seen the real budgets and a furious Baeres was forced to cover up that he had a secret understanding with Samaha to use phony budgets.

Baeres testified that on the Sylvester Stallone film “Get Carter,” he didn’t suspect that the budget was phony, even though it contained a $9 million producers’ fee. Baeres testified he believed Samaha when he told him that producer Mark Canton was “a very expensive guy” who got a $6 million producing fee and that there were other producers on the picture. (In reality, Canton got $1.5 million).

Baeres also testified that until the lawsuit was filed, he believed he was paying based on a bonded budget and specifically approved deferments. Baeres said he questioned Samaha when bank documents showed the real budget of “Battlefield Earth” was $44 million, not the $75 million that was the basis of his license fee.

Samaha told Baeres that not all of the film’s costs were covered by the bank loan, Baeres said, adding that Samaha told him the same thing when he saw the real budget of $23 million for “The Whole Nine Yards” instead of the phony budget of $40 million. Baeres testified that he did not know if it was unusual to have costs that were not covered by the bank loan.

In its $100 million fraud lawsuit against Franchise, Intertainment claims it believed it was paying 47% of the budget on a slate of films including “Whole Nine Yards,” “Get Carter” and “Battlefield Earth” in exchange for European distribution rights.

Because the budgets were wildly inflated, Intertainment ended up paying 60%-90% of the budgets. Samaha’s defense is that the budgets were inflated as part of a secret oral deal with Baeres, who knew that Franchise had no other source of financing and desperately wanted the films.

Describing his background, Baeres said that before Intertainment went public, he bought low-budget films for television and video distribution in Germany. Flush with cash from Intertainment’s IPO in 2000, Baeres decided to move into theatrical distribution of larger-budget films. When asked why he went into business with Samaha, who had no track record producing such films, Baeres said Samaha had the reputation of being able to produce star vehicles more cheaply than the studios.

He said he also was assured that Samaha was legitimate by former Warner exec Jim Miller and Imperial Bank exec Jared Underwood.

Baeres testified that, even when he became concerned about the budgets, his fears were allayed because the bank and the bond companies signed off on them.

(Intertainment is involved in a separate arbitration against the bank and the bond companies, claiming they knew about the fraud because they signed off on the real budgets to the films.)

Baeres also disputed Samaha’s testimony that Baeres forced him to make “Battlefield Earth” because he needed a John Travolta movie. Baeres said Samaha told him that it was Travolta’s pet project, and he promised him it would get made. Baeres said he agreed because he really wanted “The Whole Nine Yards” and “The Art of War.”