Sunday, 5 September 2010

Hollywood Babble On & On #589: DAMMIT! NOT AGAIN!

Welcome to the show folks...

Film financier David Molner of Aramid Entertainment Fund is being sued for misappropriation of funds by investors and is accused of using the investment fund as a "personal piggy bank."

If that sounds familiar, it's because Molner is one of the cast of thousands suing film financier David Bergstein for EXACTLY THE SAME THING.

Reports are saying that Molner was using Aramid for some un-aromatic business, using investor money to give loans to himself, others Aramid managers, and various corporate entities they control. Loans that weren't repaid, causing financial troubles for the fund and causing it to be de-listed from the Cayman Islands Stock Exchange (where the company is registered).

Reading such stories breaks my flinty little heart. Why? Well, it's because they illustrate how badly screwed up the entire industry is whether this Molner fellow is guilty or not. Here's why:


It's yet another case of how people use the overly and needlessly complicated structure of international film finance to play silly buggers for their own enrichment at the expense of their investors. It's one of the main reasons people are leery to invest in film, because where they're willing to accept risk when it comes to films making or losing money, they aren't going to accept the stupidity of people just taking their cash and running away.


It's a classic illustration of how complicated business practices can turn around and bite you on the ass if your investors aren't 110% thrilled with your performance. It doesn't matter how honest someone is, or tries to be, but in the convoluted world of international finance, good forensic accountants can probably find if not 10 felonies on every page of the company accounts, at least grounds for a lawsuit.

How can business avoid such problems?


The tax code needs to be simplified, the accounting rules need to be simplified, and the film finance business needs to be simplified. Maybe finally put the self-fulfilling idiocy that's crippling the business to an end.

Because when things are simple to understand, it's harder to steal, and it's also harder to accidentally look like you're stealing.

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