Mahmoud Karkehabadi, Who Ran $9 Million Ponzi Scam on Movie Investors, Gets 27 Years
Flavor Flav as Lucky in Confessions of a Pit Fighter.
A B- (as in bad) movie producer out of Laguna Niguel was sentenced to 27 years in prison for running a $9 million Ponzi scheme that roped investors into a series of five indies, including Confessions of a Pit Fighter with Flavor Flav and Irvine mixed martial arts fighter Quinton "Rampage'' Jackson. Mahmoud "Mike'' Karkehabadi, 55, was convicted Jan. 24 on 51 felony counts such as grand theft and fraudulent sale of securities.
Timothy Cho, Karkehabadi's 56-year-old Alliance Group Entertainment partner out of Newport Beach, was acquitted in the same case.
Karkehabadi was found guilty of promising 150 investors--21 of whom had kicked from $500,000 to $3 million each into the projects--returns ranging from 18 to 35 percent within a year no matter how well (or poorly) the pictures fared with audiences. He later convinced some to roll over their investments into newer films or extend the deadlines for returns.
But, as prosecutors proved to jurors, what Karkehabadi didn't spend on himself he used to pay off earlier investors. He was also guilty of failing to disclose to investors: a $5 million judgment the state won against him in 2003 for deceptive marketing of credit cards that couldn't be used in stores; violations of California's false advertising and unfair business practices laws in that case; and the bankruptcy he had to declare due to the judgment against him.