USAO: Man Bilked Indie Film Investors

A Redondo Beach man was one of 12 people arrested last week on federal fraud charges stemming from an investigation into two operations soliciting investments for independent films, according to a news release from the U.S. Attorney's Office.

The investigations resulted in two separate indictments filed Wednesday alleging that the defendants lied and withheld information from investors across the country, prosecutors said.

Redondo Beach resident Daniel Morabito, 31, is one of four people named in both indictments. The others are San Clemente resident Joel Lee Craft Jr., 41; Lake Arrowhead resident James Lloyd, 47; and Canyon Country resident Allen Bruce Agler, 54.

The first indictment focuses on Cinamour Entertainment LLC. Prosecutors allege that the company bilked people who invested in films titled From Mexico with Love and Red Water: 2012, according to the U.S. Attorney's Office. Prosecutors also believe that defendants raised the money through telemarketing and claimed that "93 percent of investor money would be used to produce and promote the films, and that investors would receive returns up to 1,000 percent," the statement from the office read.

Nevertheless, only about one-third of the funds from investors was used to produce and promote From Mexico With Love, and the defendants pocketed about $9.5 million from investors, prosecutors allege. The defendants raised about $2.7 million from investors for Red Water, but the movie was never made.

The second indictment concerns Q Media Assets LLC, which was run by a former CIA Agent who has already pleaded guilty to conspiracy, mail fraud and tax charges, prosecutors said. Q Media fraudulently raised funds for Eye of the Dolphin and its sequel, Way of the Dolphin—later called Beneath the Blue, prosecutors allege.

The Q Media defendants raised about $5 million for Eye of the Dolphin and about $4 million for Way of the Dolphin from about 250 investors. Eye of the Dolphin's theatrical release made about $70,000 in ticket sales; Way of the Dolphin went straight to video.

Both Cinamour and Q Media purchased "lead lists" of potential investors from a San Clemente company, and their telemarketers specifically concealed information about commissions and promised huge returns, prosecutors said.

All defendants in the Q Media case, including Morabito, face charges of conspiracy, mail fraud, wire fraud and sale of unregistered securities.