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Film Investment Scam Doesn’t Help Filmmakers

18 06 2011

This morning, as I was eating breakfast, I noticed an article online regarding a film investment scam.  According to an AP article, 18 people are being prosecuted for conspiracy and mail and wire fraud in a telemarketing scam that raised $25 million for independent productions.

Courtesy of Aleksandr Kutsayev

Among the films completed through the defendant Cinamour Entertainment LLC and Q Media Assets LLC companies include From Mexico with Love and Eye of the Dolphin and its sequel.  The former raised $15 million, was shot on a $5 million budget and only grossed $500,000; the latter, raised $9 million and only grossed $70,000.

The defendants apparently lied to investors and promised a 1,000 percent return on the films.  If anyone has ever worked in the film industry before, they know that this is a very unpredictable market and promises of this nature cannot be trusted.  Sure, some films make investors over 1,000 percent return, but many may only break even with slight return or, at worst, not even break even.

Being a filmmaker and knowing filmmakers, all of whom have projects they would like to see off the ground, it hurts to see a swindle of this nature.  It is extremely difficult to raise funds for independent projects because of the concern and relative unknown by investors when they come to a project.  The business plan, which if done right, should explain all the projected income a film could make, but also the fact that it may not make a return at all.  This outline of the film’s projected market, treatment, attached cast/crew, etc. is the only thing we have to show that we have done our work and feel this could be a good and profitable project.  Situations like this completely discredit our field and hurt the people out there trying to get legitimate projects off the ground.

Unfortunately, people that may have been willing investors before a situation like this, may opt for a “safer” bet.  I hope, for any of you potential investors out there, that you will not be discouraged from all films because of news like this.  Most filmmakers are very honest about returns and you should be presented with a well thought out and complete business plan before furnishing any money for a project.  Also, don’t ever let anyone promise you a return unless there is a contractual sale of the film already in place.

 

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