A Laguna Niguel B-movie producer who made, among other things, a film starring Flavor Flav, was charged this week with masterminding a $9 million Ponzi scheme that promised 35 percent returns for investors in his flicks.
Alliance Group Entertainment owner Mahmoud Karkehabadi, the 53-year-old producer of such smash hits as Confessions of a Pit Fighter (the 2005 Flav vehicle) and Hotel California (from 2008, remember? no? us either), was arraigned on 89 felony counts, including, according to the Attorney General Jerry Brown's office, securities fraud and grand theft. His bail is $11 million, an amount so high that even if Flavor Flav were to pawn one of his infamous neck clocks it might not cover the bill.
"This con artist sold securities under the guise of a loan to fool investors and try to avoid following the rules," Brown said. "He ran a cold and calculated scam, making promises he never intended to keep and using the funds of new victims to pay off the earlier ones."
Brown's office claims there were more than 150 victims suckered into investing in the films based on promised returns of 18 to 35 percent. If their returns were due, Karkehabadi would allegedly convince the investors to roll their cash into a new project or agree to extensions on the repayment dates.
If you like this story, consider signing up for our email newsletters.
SHOW ME HOW
You have successfully signed up for your selected newsletter(s) - please keep an eye on your mailbox, we're movin' in!
When he had to pay up, Brown alleges, Karkehabadi simply found new investors to cover the costs: Classic Ponzi.
The suspect is no stranger to the A.G. In 2003 he was sued by the state for $5 million after he allegedly sold fake credit cards to victims.
Two others were also charged in the Alliance Group case: Authorities are still searching for Timothy Cho (a.k.a. Hin-Kong Cho), 54, of Newport Beach. Deanna Salazar, 53, of Yucca Valley, has said she would surrender to authorities.
If convicted Karkehabadi could see more than 25 years behind bars. Yeah, boyeee ...