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Film Firm Told to Pay $77 Million

Producer Elie Samaha's company fraudulently padded budgets, a jury finds in a partner's suit.

June 17, 2004|James Bates | Times Staff Writer

The volatile career of dry cleaner-turned-movie producer Elie Samaha took a tumble Wednesday when a federal jury ordered his company to pay a former financing partner $77 million for padding the budgets of 17 films, including duds starring John Travolta and Sylvester Stallone.

The jury ruled that Samaha's Franchise Pictures had engaged in fraud and owed compensatory damages to Intertainment, a movie distributor and one of several German companies that struck Hollywood production deals in the 1990s only to see them implode.

The trial, which has lasted six weeks, is not over. The jury is set to hear arguments about whether Franchise must pay punitive damages as well.

The case has been closely watched as the latest chapter in the Samaha saga, which saw the Lebanese immigrant rise from founder of a chain of dry cleaners to owner of trendy nightclubs to producer of films distributed by Warner Bros. Franchise Pictures' movies, many of which fizzled at the box office, include "The Whole Ten Yards" with Bruce Willis and "Get Carter" with Stallone.

Intertainment claimed in a lawsuit that Franchise and Samaha devised a scheme to milk the German company by producing phony, inflated budgets.

Under its deal with Franchise Pictures, Intertainment agreed to finance 47% of a movie's production costs. Because that percentage was based on inflated numbers, it alleged, it ended up paying more than $115 million it shouldn't have.

Neither side disputed that budgets were inflated, but Samaha claimed it was Intertainment's idea to boost the numbers to impress stockholders.

Samaha's lawyer, Bill Price, said Wednesday's verdict in Santa Ana in essence spared Samaha by deciding that Franchise Pictures, not Samaha personally, should pay the damages. Intertainment's lawyer, Scott Edelman, disputed that contention.

In any event, Price said, whether Intertainment will see the award remains unclear because "Franchise doesn't have the money."

Samaha's first major effort, "The Whole Nine Yards," was a hit. He subsequently made a long string of critical and box-office bombs, including stinkers such as "Battlefield Earth" with Travolta, "The Art of War" with Wesley Snipes and "3000 Miles to Graceland" with Kevin Costner.

The $77-million award was less than the $115 million Intertainment sought because the company reached a deal with its bank that reduced its out-of-pocket damages.

Price said he believed his client had grounds to appeal because some evidence involving Intertainment's past use of inflated budgets was excluded. But he added that no decision on an appeal had been made.

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