Video: Hollywood producers raising funds through telemarketing fraud?
posted at 12:41 pm on February 18, 2014 by Ed Morrissey
How does Hollywood raise the money for its blockbuster films? Better yet, how do they raise the money for their schlockbuster films? CBS News did an undercover investigation into one method of raising funds in Hollywood, at least by smaller producers — telemarketing:
Making movies in Hollywood costs a lot of money, so film producers are often looking for investors to bankroll what they hope will be a blockbuster.
CBS News has learned some Hollywood producers are using telemarketers to cold call Americans, convincing them to make risky investments.
Law enforcement tells CBS News it’s a widespread fraud worth hundreds of millions of dollars over more than a decade, and CBS News has now spoken to more than a hundred investors who never saw their money again after sending a check to a voice on the phone.
First, if you’re making investments based on cold calls over the phone, I’d direct you to the film Boiler Room, or even better yet Glengarry Glen Ross. That investment in Hollywood would cost at most $10 and perhaps put you on guard against pie-in-the-sky profit claims, especially in Hollywood, where the creative department is usually Accounting. James Garner once sued over the distribution of profits from The Rockford Files, which exposed some pretty shady practices at the time regarding the definition of “profit” by the studios.
These days, the studios themselves are publicly held and have to keep their books open, so the main players have less opportunity to operate on the margins of the law. Their investors have a lot more protection, and probably start off with a lot more sophistication. The proliferation of small production companies means that the opportunity for fraud remains, though, and the use of telemarketing for cold-call investment pitches practically guarantees it. And while CBS makes sure to headline “Hollywood” here, it’s worth noting that none of these stings involved significant production firms, even among the independents.
CBS offers this advice to those tempted by such “opportunities”:
So what should you do if you get a call from a telemarketer? Tracy said on “CBS This Morning,” “You have to ask lots of questions. You got to ask these people about their past projects. Ask to see the financials from those projects. And then, get an accountant or a financial adviser involved and bottom-line, if it sounds too good to be true, it probably is.”
Better yet, hang up. You probably won’t see the movie, and it’s a near certainty that you’ll never see the money again.
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