June 28, 2016 / 8:21 PM / 3 years ago

Three charged in New York over $12 mln movie finance fraud

NEW YORK (Reuters) - Three movie financiers were arrested on Tuesday on charges they defrauded investors of $12 million that was provided to produce films and documentaries starring, among others, Harry Connick Jr and Willie Nelson.

An indictment filed in Manhattan federal court accused James David Williams, Steven Brown and Gerald Seppala of conspiring to fraudulently solicit investments in films from 2012 to 2016 with promises of guaranteed returns and profit participation.

The indictment said the trio misled investors about their own investment in the films or the funding they had already received from other investors, and used falsified documents to support their claims.

“Rather than making movies, the defendants perpetrated an advance fee scheme, allegedly using the investors’ money to pay themselves and pay other investors back,” Manhattan U.S. Attorney Preet Bharara said in a statement.

Williams, for example, used the funds to buy a home in Calabasas, California, a new car and on personal expenses at clothing stores, club memberships and his children’s school tuition, the indictment said.

None of the films was identified by name in the indictment. But some of the films matched the description of movies at the heart of a lawsuit filed in 2014 in federal court in Los Angeles by one of their former investors, Bill Busbice.

In the lawsuit, Busbice, a former chairman of the Louisiana Wildlife and Fisheries Commission who appeared in television network A&E’s “Country Buck$” reality show, said the men swindled him out of $10.9 million to secure investments in four films.

Those movies included “Angels Sing,” a 2013 Christmas family drama starring Connick and Nelson, and “Left Behind,” a 2014 Christian apocalyptic thriller starring Nicolas Cage.

A lawyer for Busbice declined to comment.

Williams, 54, was arrested in Los Angeles, Brown 46, was arrested in New York and Seppala, 47, was arrested in Minnesota, authorities said.

All three face charges of conspiracy to commit wire fraud and wire fraud. Williams and Brown also face a charge of conspiracy to commit money laundering.

A lawyer for Brown did not immediately respond to a request for comment. Lawyers for Williams and Seppala could not immediately be identified.

The case is U.S. v. Williams et al, U.S. District Court, Southern District of New York, No. 16-cr-436.

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