EXCLUSIVE: Hollywood investment company asks to reopen fraud lawsuit against Treasury Secretary Steven Mnuchin, claiming he helped swindle $81m out of investors in Ponzi-like scheme
RKA Film Financing has asked an appeals court to reopen a fraud lawsuit against U.S. Treasury Secretary Steven Mnuchin
The Hollywood company claims the former Wall Street executive helped the failing Relativity Media swindle $81m in investments
The case against Mnuchin was first tossed in June but RKA appealed in August
RKA claims Mnuchin – who invested $50m into Relativity – knew the company was failing and using investments to pay salaries and debts
The financial state was said to be so dire that Relativity used its office space to film porn movies
Mnuchin resigned from the company in 2015 and withdrew his investment the next day; Two months later Relativity declared bankruptcy
By ALANA GOODMAN
DAILYMAIL.COM
13 September 2017
A Hollywood investment company is asking an appeals court to reopen a fraud lawsuit against U.S. Treasury Secretary Steven Mnuchin, claiming he helped swindle the investors out of millions of dollars as part of a Ponzi-like scheme 2015.
RKA Film Financing claims Mnuchin and other senior leaders at Relativity Media misled it into investing $81million into Relativity’s financially troubled movie funding division.
Relativity then allegedly used the money to pay off salaries and other personal expenses rather than investing in films before declaring bankruptcy in 2015.
A New York judge previously tossed the case against Mnuchin – the former co-chairman of Relativity’s board – in June, saying there was no evidence he was aware of the alleged fraud.
But RKA is appealing that decision and is asking the court to restore Mnuchin as a defendant.
The appeal threatens to revive scrutiny over the Treasury Secretary’s business practices during his time in the private sector.
Mnuchin was criticized by Democrats for controversial investments, including his involvement with Relativity, during his confirmation hearing last February.
RKA argues in court documents that Mnuchin ‘knew that Relativity was a failing enterprise’ but allowed the company to misrepresent its finances to RKA while he was serving on Relativity’s board. It said he also engaged in ‘repeated misrepresentations’ in order ‘to misappropriate millions of dollars from unwitting investors.’
RKA claims Mnuchin – who invested $50million in Relativity and was friends with the company’s owner – was aware the film studio was using its film funding division to pay off general operating expenses such as salaries and bonuses.
But the company claims he kept his mouth shut so that Relativity could continue operating and pay back Mnuchin’s $50million investment before it declared bankruptcy.
‘Mnuchin knew this to be false and misleading, yet never disclosed same to RKA,’ said RKA in documents filed with the New York appeals court on Aug. 11.
‘Worse, as Co-Chairman of Relativity’s Board of Directors and playing a key role in attracting and obtaining further funding for Relativity, Mnuchin knowingly and willingly allowed Relativity to continue making material misrepresentations to RKA.’
The Rest…HERE
