A San Clemente man and 17 others face fraud and conspiracy charges in connection with a telemarketing scam that lured people to invest in independent films with phony promises of 1,000 percent returns and lies about how the money would be used, federal prosecutors said.
Although some of the movies were actually produced, the two indictments filed last week in Los Angeles federal court allege that defendants misled hundreds of investors around the nation.
One indictment focuses on Cinamour Entertainment, which allegedly bilked investors out of about $13 million for indie films titled "From Mexico with Love'' and "Red Water: 2012.''
Only about a third of the $15 million raised for "From Mexico With Love" was actually spent on the film, which generated about $550,000 in its theatrical release in October 2009, according to the U.S. Attorney's Office.
Prosecutors said another $2.7 million was raised for "Red Water'' from about 100 victim-investors, but the film was never produced.
The second indictment focuses on Q Media Assets in Burbank, which was run by a former CIA agent. Q Media telemarketers fraudulently raised funds for a film called "Eye of the Dolphin'' and its sequel, "Way of the Dolphin,'' later called "Beneath the Blue," prosecutors said.
Q Media and Cinamour telemarketers both bought "lead lists'' from San Clemente-based American Information Strategies. The San Clemente company's CEO, Joel Lee Craft Jr., 41, was charged with money laundering, conspiracy, fraud and selling unregistered securities.
As in the Cinamour case, telemarketers seeking investments in the "Dolphin'' movies allegedly hid information about their sales commissions while promising returns of up to 1,000 percent, prosecutors said.
About $9 million was raised from some 250 investors for the two films, federal prosecutors said.
"Eye of the Dolphin'' made about $70,000 at the box office, while the sequel went straight to video, according to the U.S. Attorney's Office.
If convicted, the conspiracy charges carry a maximum penalty of five years in federal prison, the wire and mail fraud charges have a maximum sentence of 20 years, the money laundering counts carry maximum penalties of 10 years, and the sale of unregistered securities has a maximum sentence of five years.
The case was investigated by the FBI and IRS.
-- City News Service and Patch staff reports