Joel Lee Craft Jr., Seller of Telemarketing Leads, Indicted in $25 Million Indie Movie Investment Scam

David Mamet's independent movie (and play that preceded it) Glengarry Glen Ross is about slick salesmen using underhanded tactics to rope in would-be property investors culled from what is known as “lead lists.” 

The CEO of a San Clemente information company that sells such lists to telemarketers is now facing federal fraud charges related to a $25 million scheme involving investors in indie films.
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A sweeping boiler room investigation by the FBI and IRS turned up the charges against 12 people associated with Cinamour Entertainment LLC, a Sherman Oaks company that produced the 2009 film From Mexico With Love and the unreleased Red Water: 2012.

Some of those defendants and six others are accused of similar federal counts surrounding Q Media Assets LLC, a Burbank film company started by a former CIA agent, which released Eye of the Dolphin and its sequel Way
of the Dolphin (later renamed Beneath the Blue).

The defendants are accused of essentially pulling the scam depicted in Mel Brooks' The Producers: generating millions of dollars more from investors than was used making the films, none of which made back their production costs.

Joel Lee Craft Jr., 41, of San Clemente, is the only Orange County defendant and among four who are named in both the alleged Cinamour and Q Media scams. Craft's American Information Strategies, Inc. sold
investor lead lists to telemarketing operations that solicited investors
through telephone cold calls, according to the feds.

Craft is charged with multiple counts of conspiracy, mail fraud, wire fraud, sales of unregistered securities and money laundering. In the Q Media case, he also faces two tax evasion counts. The tax evasion charges could bring a five-year sentence in the federal pen, while the maximum penalties for each other count is: five years (conspiracy and sale of unregistered securities), 10 years (money laundering); and 20 years (mail and wire fraud).

The FBI statement on the criminal indictments, which lists all the defendants and the charges against each, follows after the break . . .
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18 Charged in Fraud Cases Related to Telemarketing Operations that Solicited Over $25 Million for Indie Films; FBI and IRS Agents Arrest 12 Who Face Fraud and Money Laundering Charges

U.S. Attorney's Office

June 17, 2011
Central District of California

LOS ANGELES–12 people have been arrested this week on
federal fraud charges stemming from boiler room operations that
solicited investments in independent movies with false promises of up to
1,000 percent returns and misrepresentations as to how investor funds
would be used. Yesterday, Federal authorities arrested a total of ten
defendants; one person in Florida and nine people in Southern
California. Today, Federal authorities arrested two additional
defendants in Florida.

The arrests are the result of two indictments returned on Wednesday
by a federal grand jury. The indictments charge a total of 17
defendants–four of whom are named in both indictments–who allegedly
participated in fraudulent fundraising activities related to independent
film projects. While some of the movies were actually produced, the
indictments allege that the defendants lied, gave half-truths and
concealed material facts from investors around the nation.

Federal prosecutors have also charged an 18th person in this investigation.

A former CIA agent who ran a Burbank movie company called Q Media
Assets has already pleaded guilty to conspiracy, mail fraud and tax
charges in relation to the fraudulent boiler rooms.

In relation to the arrests this week, one indictment concerns the
activities of Cinamour Entertainment LLC, which allegedly bilked
investors who put money into independent motion pictures called “From
Mexico with Love” and “Red Water: 2012.” The defendants raised money for
the films through boiler room telemarketing operations, which made
fraudulent pitches to investors. The charged defendants and other
telemarketers cold-called investors from “lead lists” and solicited
investments with false claims, such as that 93 percent of investor money
would be used to produce and promote the films, and that investors
would receive returns up to 1,000 percent. According to the indictment,
the telemarketers failed to disclose that they would receive commissions
when, in fact, often more than one-third of the investments went into
their pockets. Little more than one-third of investor funds were used to
actually produce and promote “From Mexico With Love.”

During the course of the Cinamour scheme–which the indictment alleges
ran from early 2004 through May 2009–the defendants collected
approximately $15 million for “From Mexico With Love” from about 450
victim-investors. The movie cost about $5 million to produce and
generated approximately $550,000 in its theatrical release in October
2009. The defendants raised about $2.7 million for the “Red Water” movie
from about 100 victim-investors, but essentially none of the money was
used to produce the film, which was never made.

The second indictment filed this week focuses on Q Media Assets LLC.
This indictment alleges that telemarketers for Q Media fraudulently
raised funds for films called “Eye of the Dolphin” and its sequel, “Way
of the Dolphin” (which was later called “Beneath the Blue”). Telemarkers
associated with Q Media also bought “lead lists” from the same San
Clemente company that sold lists to the Cinamour telemarketers. As in
the Cinamour case, telemarketers seeking investments in the Dolphin
movies allegedly “made material misrepresentations, told material
half-truths, and concealed material facts, when speaking to investors,”
specifically concealing information about commissions and promising
returns of up to 1,000 percent.

The defendants in the Q Media case raised approximately $5 million
for “Eye of the Dolphin” and about $4 million for “Way of the Dolphin”
from about 250 investors. “Eye of the Dolphin” made about $70,000 in
ticket sales in its theatrical release, while “Way of the Dolphin” went
straight to video.

The 45-count Cinamour indictment charges a dozen defendants:

• Daniel Toll, 56, of Encino, who was president of Cinamour, will make his initial appearance in two weeks;
• Joel Lee Craft Jr., 41, of San Clemente, who was the CEO of the San
  Clemente-based American Information Strategies, Inc., which sold
  investor lead lists to telemarketing operations that solicited investors
  through telephone cold calls, appeared in court yesterday;
• James Lloyd, 47, of Lake Arrowhead, who was a “closer” for Cinamour
  and later operated his own boiler room that raised money for Cinamour
  and Q Media, will appear in court Thursday, June 23;
• Paul Baker, 50, of Palm Springs, a closer for Cinamour, who later
  operated his own boiler room under the name Independent Essentials that
  raised funds for Cinamour, will appear in court today;
• Bart Douglas Slanaker, 48, of Panorama City (who is already in
  custody after being charged earlier this year in another movie-related
  telemarketing case), was another closer who helped raise funds for
  Cinamour in several capacities;
• Allen Bruce Agler, 54, of Canyon County, a closer who used the name
  “Paul Kingman” and raised funds for “From Mexico With Love,” appeared in
  court yesterday;
• Albert Greenhouse, 58, of Delrey Beach, Florida, who also raised funds for “From Mexico With Love,” will appear in court today;
• DeLitha Jones-Floyd, 54, of Lancaster, another closer, will appear in court Thursday, June 23;
• Brian Emmanuel Ellis, 35, of Saugus, another closer, appeared in court yesterday;
• Daniel Morabito, 31, of Redondo Beach, a closer, appeared in court yesterday;
• David Nelson, 40, of Eagle Rock, a closer, will appear in court Thursday, June 23; and
• Daryll Van Snowden, 40, formerly of Chatsworth and now of West Hollywood, another closer, is still being sought by authorities.

All 12 defendants are charged in a conspiracy count, as well as
in several of the 15 mail fraud counts, nine wire fraud counts and 13
sale of unregistered securities counts that are alleged in the
indictment. Additionally, Craft, Toll and Floyd are each named in at
least one of five money laundering counts. The indictment also charges
Slanaker with two counts of tax evasion.

The 33-count Q Media indictment charges nine defendants, including
Lloyd, Agler, Craft and Morabito. The indictment additionally charges:

• Robert Keskemety, 56, of Hallandale Beach, Florida, a closer, appeared in court yesterday;
• Jady Laurence Herrmann, 34, of Lake Arrowhead, a closer, appeared in court yesterday;
• Joseph McCarthy, 37, of Boynton Beach, Florida, a closer, will appear in court today;
• Matthew Bryan Wellman-Mackin, 30, of Manhattan Beach, a closer, appeared in court yesterday; and
• Robert Ramirez, 44, of Sunland, who was hired by Sellers to handle investor relations, appeared in court yesterday.

All nine defendants in the Q Media case, including those also
charged in the Cinamour case, face charges of conspiracy, mail fraud,
wire fraud and sale of unregistered securities. Lloyd is also charged in
this indictment with two counts of money laundering. Craft is also
charged in this indictment with two counts of tax evasion.

Slanaker and another man who is now deceased were previously charged
with fraudulently raising money for another independent movie by
claiming, among other things, that well known stars were associated with
the project (see: http://www.justice.gov/usao/cac/pressroom/pr2011/035.html).
Slanaker, who is charged with mail fraud and wire fraud in this case,
is currently scheduled to be tried in this case on August 16 in United
States District Court in Los Angeles.

An indictment contains allegations that a defendant has committed a
crime. Every defendant is presumed innocent until and unless proven
guilty.

The charge of conspiracy carries a statutory maximum penalty of five
years in federal prison or custody. The wire fraud and mail charges have
a maximum possible sentence of 20 years. The money laundering counts
alleged in the indictment carry maximum statutory penalties of 10 years.
The charge of sale of unregistered securities has a maximum possible
sentence of five years. And the tax evasion charges have a maximum
possible sentence of five years.

The investigation into fraudulent boiler rooms raising money for
independent movies is being conducted by special agents with the Federal
Bureau of Investigation and IRS–Criminal Investigation.