2827 von Dalle 19.06.04 15:42:09 Beitrag Nr.: 13.474.227 13474227
Samaha to pay damages to Intertainment
By Jesse Hiestand
A federal jury has hit Elie Samaha and his Franchise Pictures for $29 million in punitive damages, compounding an earlier $77 million verdict for defrauding German distributor Intertainment Licensing by inflating the budgets on 16 co-productions.
Intended as a form of extra punishment, the punitive damages were apportioned across all defendants -- $4 million against Samaha, $1 million against Franchise and $1.5 million for each of the one-off companies formed for each feature.
Friday's result marked the end of the complex, four-year trial but only the beginning of what is likely to be a protracted effort to collect those funds. In testimony Thursday, Samaha claimed to have a negative net worth of $10 million while Franchise was said to be in the red by about $120 million. The case could also get tied up in appeal.
" There's no question that we're going to have to ferret out Mr. Samaha's assets," Intertainment attorney Scott Edelman said. " (Samaha) tried to plead poverty but by rendering this award the jury said they did not accept that his financial statements were accurate."
Defense attorney Bill Price said he thinks the verdict would have been different had the jury been allowed to hear alleged evidence that Intertainment CEO Barry Baeres was regularly inflating film budgets before he and Samaha went into business in May 1999.
" This verdict doesn't mean that the jury agrees that Mr. Baeres was innocent," Price said. " In fact, Intertainment specifically argued to the jury that even if (Baeres) knew about (the budget inflation), Franchise was still liable."
The damages are already a source of contention.
U.S. District Court Judge Alicemarie Stotler allowed the jury, sitting in Santa Ana, Calif., to award the $77 million compensatory damages in a lump sum. They did so, placing the burden entirely on Franchise even though all the defendants were found to have committed fraud and breach of contract.
Price said the jury did not find conspiracy to defraud, so it was required to dole out the damages only to those defendants who deserved it. Since Samaha and the individual production companies were spared of those damages, Price argued that they could not be targeted for further punitive damages.
Intertainment's Edelman told the jury that they could clear up the confusion by hitting all of the defendants with punitive damages, which they did.
" The jury has now shown that that was their intent all along," Edelman said.
The judge will have the final say but only after the two sides have an opportunity to argue the matter.
Intertainment had asked the jury for $115 million, roughly the amount it claimed to have overpaid on the inflated budgets for such films as " Get Carter," " The Whole Nine Yards" and " 3000 Miles to Graceland."
Under the multipicture agreement, Intertainment was supposed to pay 47% of the budgets in return for European and other distribution rights. The five year, 55-picture production-distribution deal with Franchise was reached shortly after Intertainment, a niche distributor founded by Baeres, went public on the German markets with an overnight value of $800 million.
Baeres testified that he hoped to take advantage of Samaha's contacts in Hollywood and his ability to produce star-driven features for cheap.
Franchise acknowledged throughout the trial that the budgets were inflated but said Baeres was a willing participant so he'd have a guaranteed pipeline of major features to help sustain Intertainment's stock price.
Baeres insisted he trusted Samaha until he discovered that Intertainment was unwittingly funding 70% or more of these films, all of which have been box office disappointments except for " The Whole Nine Yards."
Intertainment has also accused Comerica Bank and the completion companies Worldwide FilmCompletion and Film Finances of being complicit in the fraud and hopes to prove that at arbitration this fall.
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