October 10, 2016

September 23, 2016

The SEC charged three company executives — Manu Kumaran, founder and former chairman and CEO of startup movie production company Medient Studios and later Moon River Studios, Jake Shapiro, his successor CEO, and Roger Miguel, CEO of a separate successor public company called Fonu2 that also operated under the name Moon River Studios — with defrauding investors in a purported project to construct the largest movie studio in North America at a suburban location outside Savannah, Georgia.  Kumaran and Shapiro allegedly made an assortment of false and misleading statements in press releases and corporate filings, claiming that construction of the “Studioplex” was under way and projecting dates by which the studio would be operational while knowing that they did not have anywhere near sufficient funding to begin building the studio.  In addition, Kumaran, Shapiro, and Miguel allegedly backdated and falsified promissory notes as part of a scheme to issue common stock in exchange for financing.  The StudioPlex never materialized and the company eventually shuttered without releasing a single movie or video game.  But Kumaran and Shaprio nevertheless enriched themselves in the process.  According to the SEC’s complaint, Kumaran spent an average of $1,700 per day of company funds on his globetrotting travel and personal expenses from April 2014 through June 2014 after claiming publicly that he did not draw a salary and all funds were being used to benefit the company.  Shapiro allegedly misappropriated company funds for personal use after becoming CEO and lived in a house worth nearly a million dollars that was paid for by the company.  Three company directors who are not alleged to have participated in the fraud were separately charged with violating federal securities laws by failing to timely report their stock transactions in the company while serving on its board.  Former New York Governor David A. Paterson and music producer Charles A. Koppelman each agreed to pay $25,000 to settle the charges against them.  An administrative proceeding was instituted against Matthew T. Mellon II, a businessman and former chairman of the New York Republican Party Finance Committee.  SEC

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