By BENJAMIN WEISERDEC. 12, 2014
If Hollywood likes a good cautionary tale about the dangers of seeking movie financing, the experiences of Fay Devlin would seem to be fodder for a surefire hit.
Mr. Devlin is a construction executive in New York who decided to enter the movie business. A $50,000 investment went to a new film company; an additional $250,000 followed, and things soon began to fall into place.
Chazz Palminteri signed on as the screenwriter for one project; John Travolta was to star in another, based on the life of John J. Gotti.
And then the plot thickened. A man who the authorities now say was a con artist appeared, leading Mr. Devlin and the film company, Fiore Films, halfway around the world in search of $200 million in financing that was never delivered.
The authorities say Mr. Devlin was defrauded of more than $1.8 million that he had wired into accounts controlled by a man named Salvatore Carpanzano. But as described in a federal criminal complaint, this was no run-of-the-mill fraud; this was something worthy of an Elmore Leonard novel.
The general counsel for Fiore Films, his suspicions apparently growing, flew to Istanbul, where he met with Mr. Carpanzano and another man. The meeting would end not long after a rather pointed threat from the man, described as a co-conspirator, a criminal complaint says.
The general counsel, the man warned, “would not get out of Turkey alive.”
Mr. Carpanzano, of Scarsdale, N.Y., was arrested late last month, and in federal court in White Plains he was ordered detained on fraud charges. He was accused of three separate frauds, although the movie investment scheme, as the government describes it, appears to have been the most audacious. Mr. Carpanzano did not enter a plea, and his lawyer did not return messages seeking comment.
Movie financing, despite its risks for outside investors, usually does not lack for candidates; Hollywood film credits are rife with investors given the honorary title “associate producer.”
“It tends to be a glamour business,” said S. Abraham Ravid, a Yeshiva University professor who has studied movie financing and cites such “intangible” attractions for investors as being invited to movie openings and meeting movie stars.
“It’s easier to raise funds sometimes for a risky movie than it would be for a risky real estate venture,” Professor Ravid said.
For people like Mr. Devlin, who lack movie industry experience, the risks can be higher.
“It wasn’t a good investment, obviously,” said Gerard L. Keogh, Mr. Devlin’s lawyer. “We came from real estate and construction, where it’s a little easier to project risk.”
Mr. Devlin first became involved in the film projects in 2009, nearly two years before Mr. Carpanzano surfaced, the complaint says. (The document, signed by an F.B.I. agent, Maryann W. Goldman, and a prosecutor, Michael D. Maimin, does not name the victims, but their identities were determined through interviews and news reports about the film company’s projects.)
Mr. Devlin met Marc Fiore, who said he was trying to produce a movie called “Mob Street.” According to the complaint, Mr. Devlin invested $50,000 in the production through Fiore Films.
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Mr. Palminteri eventually wrote the screenplay, described on Fiore Films’ website as based on a true story of the mid-1990s, when “unbeknownst to the F.B.I., the Italian Mafia was running Wall Street,” and former hit men were living like movie stars in magnificent mansions “until everything came crashing down.”
Mr. Devlin’s second investment, of $250,000, was made in order for Fiore Films to buy the rights to “the story of a well-known criminal,” the complaint says.
In September 2010, Fiore Films announced it had acquired the rights to the story of John A. Gotti and his relationship with his father, who died in prison in 2002.
The company website says the story “reveals the relationship of a father who lived and died by the mob code and a son who chose to leave that world behind and redeem himself.”
Later, Fiore Films announced that Mr. Travolta would star as the elder Mr. Gotti, news releases show, with production to begin in fall 2011 and a theatrical release scheduled for late 2012.
The problems started in 2011, before production was to have begun on the Gotti film. An associate with Greenberg Traurig, a law firm representing Fiore Films, told Mr. Devlin that another one of the firm’s clients could be tapped for even more financing.
Mr. Keogh said that Mr. Devlin, “recognizing that he needed expert advice because he was a neophyte investor,” had Fiore Films retain Greenberg Traurig throughout the discussions.
Through the associate, a meeting was set up with the client, a company called Treasures FZE.
Mr. Devlin and Fiore Films’ general counsel traveled to New Jersey to meet with Mr. Carpanzano, who claimed to represent Treasures FZE. The complaint says that during the meeting, Mr. Carpanzano called the man whom prosecutors describe as his co-conspirator, apparently the head of Treasures FZE, who had access to the financing.
Mr. Carpanzano told Mr. Devlin and the general counsel that to obtain $200 million in financing, they would have to place $1.3 million in an escrow account in an investment company tied to Mr. Carpanzano, according to the government’s account.
An agreement was reached, and on July 25, 2011, Mr. Devlin wired about $1.3 million into the account. Shortly thereafter, he, Mr. Carpanzano and the Fiore Films’ general counsel, Michael Froch, boarded a plane to Zurich to close the deal, the complaint says.
While they were in flight, a banker for Mr. Devlin became aware that someone was trying to transfer the $1.3 million out of the escrow account, the government says. The banker called Mr. Keogh, who ordered the funds frozen.
When the plane landed in Switzerland, Mr. Devlin was told of the transfer attempt. He confronted Mr. Carpanzano, asking what was going on.
Mr. Carpanzano said Treasures FZE was trying to move the money “in order to provide better financing terms,” the complaint says, and he added that the overseas partner had been “insulted” by the freezing of the funds.
Mr. Carpanzano and the co-conspirator spoke with Mr. Devlin and persuaded him “to authorize the release of the funds,” the complaint says.
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In August, Mr. Carpanzano asked Mr. Devlin for $500,000 in “closing costs,” which he sent by wire, the government says.
The next month, prosecutors say, Mr. Carpanzano asked Mr. Devlin to wire another $1 million into an account controlled by Mr. Carpanzano’s wife. This time, Mr. Devlin refused.
Then things began to further unravel. Mr. Carpanzano produced a document purporting to confirm that more than 200 million euros (worth about $270 million at the time) had been delivered to Fiore Films in a deal handled through a banker at Deutsche Bank, the complaint says.
Mr. Devlin’s banker found that the person cited actually worked in Deutsche Bank’s press department, and had no role in wire transfers. Meanwhile, Mr. Froch, the Fiore Films general counsel, spoke with an investigator at the Federal Reserve Bank in New York, who said the document appeared to be fraudulent, prosecutors say.
It was in October that Mr. Froch flew to Istanbul with Mr. Carpanzano. There, the man identified by the government as a co-conspirator said Mr. Devlin’s “team was in error” and warned that Mr. Froch would not leave Turkey alive. (Mr. Froch was able to leave the country safely, the complaint notes.)
A Fiore Films spokesman said this week that the Gotti and “Mob Street” films were delayed, but that the company was actively pursuing making them.
Mr. Keogh said Mr. Devlin was not particularly a movie buff or someone interested in meeting stars and would never have dealt with Mr. Carpanzano had it not been for Greenberg Traurig.
“The truth is, I’m bitterly disappointed in their role in this,” Mr. Keogh said.
A Greenberg Traurig spokeswoman said the firm had no comment.
As for Mr. Devlin, will he invest in another film project?
“No,” Mr. Keogh said. “We learned our lesson.”
