Canadian producer Gary Howsam has been ordered to pay $18 million to Comerica Bank after an arbitrator concluded that he was involved in a scheme to present forged distribution agreements to the bank in order to obtain loans for the production of seven independent features made from 1999 to 2001.
Howsam, who went on to serve as CEO of Peace Arch Entertainment until stepping down in 2007, also was ordered to pay interest, attorneys fees and costs. His most recent credits include the feature “Casino Jack” and Showtime’s “The Tudors.”
Los Angeles Superior Court Judge Amy D. Hogue confirmed the arbitration award in an order filed with the court Dec. 22. Also named as defendants were a number of his companies, including Greenlight Film and Television.
Last year, following a criminal investigation, federal prosecutors dismissed without prejudice bank fraud charges against Howsam, but the civil action against him and his companies continued.
“Mr. Howsam has maintained his innocence throughout, which he continues to assert,” Charles M. Coate, his attorney, said in a statement on Wednesday, noting that award was made in default because they declined to participate in much of the arbitration process after raising a number of objections about the proceedings. He said they would evaluate their next step “once a final judgment has been entered.”
Comerica’s civil claims were ultimately decided via an arbitrator for the Independent Film & Television Alliance, Stephen S. Strick, who concluded that Comerica proved its fraud claims. In a 22-page document filed with the Superior Court, Strick described a process in which Howsam conspired with Harel Goldstein, international sales agent for his company, to obtain a total of more than $37 million in loans from Comerica to make a series of movies including “The Circle,” “Kevin of the North,” “Road Rage” and “Ignition,” even though a number of forged distribution agreements were submitted to the bank to make it appear that the projects had obtained pre-sale commitments.
In one case, Strick wrote, when Goldstein forged a distribution agreement that was then transmitted to Comerica to close the loan for “Road Rage,” and when Goldstein advised Howsam of the fact after the loan closed, “Howsam applauded the conduct, complimented it as ‘creative thinking,’ and admitted that he (Howsam) had engaged in similar conduct to get loans closed.”
Goldstein is serving a federal prison sentence.”The evidence also establishes that Howsam ratified the fraud and actively tried to hide, destroy and obstruct Comerica’s efforts to prove the fraud,” Strick wrote.
Comerica, represented by a team led by Peter G. Bertrand of Buchalter Nemer, said that it was still owed $18.2 million in production loans.Coate, however, said that the hefty award came after their withdrawal from the arbitration process, the impartiality of which they challenged through a series of motions. Among other things, he said that Strick ignored timely objections and did not recuse himself from the case after he disclosed that he had represented clients who had bank accounts at Comerica. He added that the hefty arbitration fees were “far in excess” of “what was contemplated or is customary for such informal arbitration proceedings” and that his clients “had no resources to support ongoing costs and fees associated with this matter.”
Strick defended the nature of the proceedings, saying that they were done in a “fair, independent and impartial manner,” and an IFTA arbitration agent backed him up and declined to remove him, finding his representation of clients as “unrelated” to the proceeding.
Strick’s award statement cited testimony and evidence presented in the arbitration proceedings, including testimony from Goldstein, but portions were redacted. Coate had sought to keep portions that mentioned a 2007 meeting between Howsam and Goldstein — recorded by the FBI — under seal, as was ordered by a federal court.