The former CEO of a would-be movie production company and his successor have been charged with falsely claiming they were building the largest film studio in North America and using investor funds to finance a “Hollywood lifestyle.”
The U.S. Securities and Exchange Commission said Medient Studios founder Manu Kumaran schemed with his successor as CEO, Jake Shapiro, to make an assortment of false and misleading statements in press releases and corporate filings, some of which touted the company’s plan to construct the Studioplex near Savannah, Ga.
Kumaran is also accused in a civil complaint of “recklessly” spending more than $122,000 of Medient’s money to “support a lavish lifestyle for himself and his entourage,” while Shapiro, his former finance chief, allegedly lived in a house worth nearly a million dollars that was paid for by the company.
Medient later went by the name Moon River Studios. In a March 2014 “letter to shareholders,” it assured investors that “No one is buying houses or Ferraris with your money.”
“Kumaran and Shapiro preyed upon investor interest in the movie industry and financed their own lifestyles rather than build the promised Studioplex,” Walter Jospin, director of the SEC’s Atlanta regional office, said in a news release.
Kumaran, an Indian citizen, announced in July 2013 that Medient had begun grading land in Georgia “as part of a construction plan to have the [S]tudioplex operational by the first quarter of 2014.”
According to the SEC, Medient’s primary method of raising capital for the project was to issue shares of its common stock at a deep discount to microcap financing companies. The funding meant Kumaran could “continue to use Medient’s bank account to support his ‘Hollywood’ lifestyle,” the SEC said.
Medient shut down in early 2015, having failed to release a single movie or video game as a public entity and with no construction having started on Studioplex. According to the SEC, it purportedly transferred its assets to Fonu2, a different public company where Shapiro is currently chairman.
Fonu2 CEO Roger Miguel agreed to settle charges that he acquired Fonu2 shares while in possession of material nonpublic information about upcoming asset transfers from Medient.