LOS ANGELES (AP) — Six Southern California men have been charged with stealing millions of dollars by offering investments in phony movies with names like "The Smuggler" that supposedly featured well-known actors such as Donald Sutherland, federal authorities said Thursday.
The men were charged with fraud in two federal grand jury indictments and could face up to 20 years in prison if convicted, prosecutors said.
Arrested Thursday were Samuel Braslau, 53, of Los Angeles and Rand Jay Chortkoff, 64, of Los Angeles, who co-founded the company Mutual Entertainment LLC (later renamed Film Shoot LLC), along with an alleged salesman, Stuart Rawitt, 47, of West Hollywood, prosecutors said.
Braslau pleaded not guilty Thursday, said his attorney, Anne Hwang.
Rawitt pleaded not guilty several weeks ago, said his attorney, Bernard J. Rosen.
A message left for Chortkoff's lawyer was not immediately returned.
Another alleged salesman, Robert Matias, 50, of Los Angeles, is a fugitive, prosecutors said.
Also arrested Thursday was Anthony David Millan, 37, of Chula Vista, who was chief executive officer of a company called C22, authorities said.
Millan has pleaded not guilty, said his lawyer, Tim Scott.
C22's president, Mack Machen, 70, of Los Angeles, was expected to surrender. A messages left for his attorneys was not immediately returned.
Prosecutors contended that companies were "boiler room" telemarketing operations that called people around the country and convinced some 140 people to invest nearly $5 million in bogus film projects, prosecutors contend.
"While one movie script was written, no movies were ever actually produced," the U.S. attorney's office statement said in a statement.
C22 claimed to be raising money for a movie called "Beyond the Mat," authorities said.
The other company raised money for a film initially called "Marcel," authorities said.
However, in 2011, the Alabama Securities Commission filed an order against the company for violating state investment law, so the company name was changed and the movie renamed "The Smuggler" to hide the order from potential investors, the federal indictment alleged.
Also Thursday, the Securities and Exchange Commission filed a civil lawsuit alleging that Braslau, Chortkoff and Rawitt defrauded investors.
"Investors were falsely told that actors ranging from Donald Sutherland to Jean-Claude Van Damme would appear in the movie when in fact they were never even approached," an SEC statement said.
The men "sold investors on the Hollywood dream," Michele Wein Layne, director of the SEC's Los Angeles regional office, said in the statement. "But the dream never became a reality because they took investors' money for themselves rather than using it to make a movie."