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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of New York

FOR IMMEDIATE RELEASE
Thursday, April 5, 2018

California Man Pleads Guilty To Multimillion-Dollar Fraud On Film Investors

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that STEVEN BROWN pled guilty today to defrauding victims of over $9.5 million by participating in a fraudulent scheme to solicit investments in feature-length films and documentaries based on misrepresentations and fraudulent documents.  BROWN pled guilty before United States Magistrate Judge Henry B. Pitman and is scheduled to be sentenced on July 18, 2018, at 2:00 p.m., before U.S. District Judge Kimba M. Wood. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As he admitted today, Steven Brown defrauded investors of millions of dollars by convincing them to invest in Hollywood films and documentaries with false promises and fraudulent documents.  Even after he was arrested, he continued his fraud and induced yet another investor to provide additional money using the same fraudulent tactics.  Now Brown’s scheme has been revealed, and he faces significant time for his scheme.”        

According to allegations in an Indictment and other documents filed in federal court, as well as statements made in public court proceedings:

From 2009 through 2017, STEVEN BROWN participated in a scheme in which he, along with co-conspirators, solicited investments in the marketing and production of feature-length films and documentaries from investors, including by furnishing them with fraudulent documents and by promising guaranteed returns, which never materialized.

In order to solicit these investments, BROWN and others made material misrepresentations about, among other things, their own investments in the films for which they were soliciting money, as well as investments that they claimed to have received from other investors.  To support their claims, BROWN and his coconspirators at times sent the victims falsified financial records that reflected investments in the films that had never actually been made.  BROWN and his coconspirators also told certain victims that their investments would be guaranteed by a fictitious entity, and provided falsified documents in support of these purported guarantees.  On one occasion, Brown sent an email to a victim attaching what purported to be a current bank statement for an account held by the fictitious entity, as well as an email from an executive at the fictitious entity guaranteeing the victim’s investment.  In fact, neither the account nor the executive actually existed.

BROWN continued to solicit investments in film projects based on misrepresentations even after being arrested on the criminal charges brought in this case.  In 2017, BROWN solicited an investment from a victim of the scheme in a film production and distribution company with which BROWN was purportedly involved by promising the victim a 50 percent return on the investment.  The victim’s funds were never returned and were, in part, used to pay expenses unrelated to any film projects.    

In total, BROWN and his co-conspirators solicited millions of dollars from their victims, allegedly to be used for either marketing or production costs associated with the various films.  In reality, however, the money that was received from these investors was primarily used to fund other projects, to pay back previously defrauded investors, and to pay the personal expenses of BROWN and his co-conspirators, including, among other things, the purchase of a condominium for BROWN.

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BROWN, 48, of Los Angeles, California, pled guilty to one count of conspiring to commit wire fraud, which carries a maximum term of 20 years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Katherine Reilly, Noah Solowiejczyk, and Ryan Finkel are in charge of the prosecution.

 

Topic(s): 
Securities, Commodities, & Investment Fraud
Press Release Number: 
18-109
Updated April 5, 2018