×
You will be redirected back to your article in seconds

Relativity Media Investor Claims $12.5 Million Fraud

A hedge fund investor is doubling down on his claim that Ryan Kavanaugh defrauded him into investing into Relativity Media, the twice-bankrupt mini-studio.

Carey Metz filed an amended lawsuit in Los Angeles Superior Court on Thursday, accusing Kavanaugh, the founder and CEO, of conning him into making a $10 million investment in the company in 2013. Metz had earlier alleged that Kavanaugh duped him into making a $2.5 million investment in the company as it verged on bankruptcy in 2015.

The amended complaint comes two weeks after a New York bankruptcy judge dismissed portions of Metz’s original complaint alleging breach of oral contract, unjust enrichment, and other torts. Judge Michael Wiles held that Metz’s claims were barred by a release that accompanied Relativity’s initial plan of reorganization in 2016.

Relativity first recently declared bankruptcy for a second time, having failed to raise $100 million in new equity since first emerging from bankruptcy two years ago. The company is now seeking a bankruptcy sale to UltraV Holdings.

Wiles’ ruling did not bar Metz from pursuing allegations of fraud. In the amended complaint, he alleges that Kavanaugh lied in order to get Metz to invest the original $10 million.

“He did so by misrepresenting that Relativity based its investing decisions on a proprietary algorithm and computer model based on a rigorous set of inputs and assumptions that enabled it to predict a film’s potential success with greater reliability than even the most experienced studio executives,” the suit states.

Only after making the second investment did Metz discovered the alleged fraud, the complaint states.

“Metz discovered, for the first time, that Relativity’s vaunted model for predicting the potential financial success of a movie lacked mathematical rigor and was of limited, if any, value as a predictive tool,” the suit alleges. “He also discovered that, contrary to Kavanaugh’s representations at the time he originally invested in 2013, Relativity had not consistently followed its own computer model when making decisions about what films to finance.”

Kavanaugh’s representative did not immediately respond to a request for comment.

Update, 10:42 a.m. Friday: Kavanaugh’s spokesman issued the following statement:

“Carey Metz signed a full and complete release; he was on the board of Relativity and had equal or better access to information than Kavanaugh; and the statute of limitations has long passed for his claim. It is suspicious coming on the heels of Metz’s recent loss in US Bankruptcy Court.”

More Biz

  • Leaving Neverland HBO

    'Leaving Neverland' Lawsuit Proves to Be a Judicial Hot Potato

    The Michael Jackson estate sued HBO last month for airing the documentary “Leaving Neverland,” which accuses the late King of Pop of serial child sexual abuse. Since then, the case has had a difficult time finding a judge to handle it. Three federal judges have recused themselves in the last week, citing potential financial conflicts [...]

  • Members of the public mourn at

    Guy Oseary’s New Zealand Fundraiser Nears $150,000, Continues Raising Money

    In the wake of the horrific shootings at New Zealand mosques last week that killed some 49 people, Maverick chief Guy Oseary launched a GoFundMe campaign to “support those affected by this tragedy at this very difficult time,” and began it with an $18,000 donation. Boosted by donations from many celebrities — including Amy Schumer, [...]

  • Cesar Sayoc Headshot

    Florida Man Pleads Guilty in CNN Pipe Bomb Case

    A Florida man pleaded guilty Thursday to sending pipe bombs to CNN and prominent critics of President Donald Trump. Cesar Sayoc appeared in federal court in New York, where he pleaded to 65 counts stemming from the mailing of 16 devices. He faces life in prison, plus 120 months, at his sentencing on Sept. 12. [...]

  • Tencent Profits Hit $1 Billion Per

    Tencent Profits Hit $1 Billion per Month as Company Loses Fizz

    Growing regulatory encroachments into its games business, a smaller than expected spin-off for its music division, and a fourth quarter profits drop, pointed to a troubling year for Chinese tech giant Tencent. Its financial results for the full 2018 period, while delivering profits of nearly $1 billion a month, appeared to bear out that thesis. [...]

  • splice

    Splice Raises $57.5 Million in Latest Funding Round

    Splice, a favorite of music creators that allows access to a library of three million rights-cleared sounds, announced today that the company closed a Series C funding round at $57.5 million. That brings Splice’s total amount raised to roughly $102 million since its launch in 2013. It raised a Series B in November of 2017. [...]

  • WGA Agents Contract Tug of War

    WGA Leaders to Meet With Showrunners on Agency Packaging Fight (EXCLUSIVE)

    WGA leaders are set to meet Wednesday night with a group of showrunners who are raising concerns about the guild’s handling of negotiations with talent agents over the issue of packaging fees and agency-affiliated productions. The meeting is set for 7:30 p.m. at WGA West headquarters. WGA West president David Goodman is expected to attend. [...]

  • Bill Murray St Vincent 2014

    Weinstein Co. Sued Over Trademark Infringement in Bill Murray Film

    A horse-racing announcer has sued the Weinstein Co., claiming that the company infringed on his trademarked phrase in a 2014 Bill Murray movie. Dave Johnson is the man behind “And down the stretch they come!,” which he began using while calling races in Illinois in the 1960s. The phrase took off when Johnson moved to [...]

More From Our Brands

Access exclusive content