Filmmaker Cleared of $21 Million Ponzi Charges

LOS ANGELES (CN) — A Superior Court judge Thursday dismissed criminal securities fraud charges against a filmmaker whom prosecutors accused of working with an insurance saleswoman to swindle $21.5 million from victims in a Ponzi scheme.

Los Angeles County Superior Court Judge Michael Pastor dismissed the two remaining charges against 66-year-old Israeli filmmaker Dror Soref: misrepresentation of a material fact in connection with the offer or sale of a security; and using a device, scheme or artifice to defraud in connection with the offer or sale of a security.

The ruling in his downtown courtroom came after a Feb. 27 ruling in which Pastor gutted the state’s complaint against Soref, finding that prosecutors took too long to file 70 charges in the criminal complaint under California law.

After his arrest in September 2015, Soref was jailed for five months, including a stint in Men’s Central Jail after a judge set bail at $2.7 million.

Soref, wearing a black suit and tie, spent much of the morning hearing hunched in his seat, occasionally consulting with his lawyers. He turned and smiled at friends and family as Pastor ruled the government had failed to make clear that he was part of a Ponzi scheme that targeted elderly investors.

“Good luck to you, Mr. Soref,” Pastor said at the close of the hearing.

Flanked by his friends and wife Virginia, Soref said outside the courtroom that he was happy the judge had exonerated him. His time in jail hurt his career and kept him away from his daughter, who was 5 at the time of his arrest, he said.

“I’m very relieved because I can start my life again. There’s a lot to rebuild because it was destroyed. I don’t have that issue to deal with. And I just want to thank my fantastic lawyers and my friends,” he said.

His attorney Bryan Altman said he was outraged prosecutors had charged Soref when it was “abundantly clear” that the case was untimely under the statute of limitations.

Prosecutors claimed Soref and insurance agent Michelle Seward, 44, persuaded 140 investors to part with their life’s savings to invest in the Soref-directed thriller “Not Forgotten,” and a musical called “Twist.” The defendants used a glossy coffee-table book in sales pitches that took place in elderly investors’ homes, and at seminars between 2007 and 2010, the criminal complaint alleged.

Soref faced up to 75 years in prison if convicted.

Attorney Altman said that Soref “was taken advantage of, dramatically, and all these people were taken advantage of.” After two weeks of preliminary hearings it was clear that investors had “exclusive contact” with Seward or her agents, not Soref, he said.

“That was never in doubt,” he added.

Seward entered into a plea agreement in exchange for testifying against Soref. Altman took advantage of the state’s decision by shifting the blame to Seward, who he said was the linchpin of the scheme. Soref was unwittingly caught up in Seward’s machinations and was only interested in making the indie thriller, he said.

One of the two remaining charges related to investor Ann Licata, who died last year at 87. Altman said there was a “dramatic lack of evidence” linking Soref to her, and that Seward and her brother Jeremy LeClair had solicited her investment.

Deputy District Attorney Renee Cartaya argued that Soref insulated himself in his company, Windsor Pictures. As Windsor’s chief executive, Soref knew that new investors’ money was being used to pay off earlier investors, the modus operandi of Ponzi schemes, she said.

“It’s clear he’s the man controlling the bank accounts,” Cartaya said. But she failed to persuade Judge Pastor. He said that though the bar for establishing probable cause is “extremely low,” the government’s evidence against Soref was insufficient.

After the ruling, Cartaya hastily left the courtroom and did not respond to requests for comment by phone and email. In February, she said prosecutors had taken several steps before charging Soref, including contacting businesses involved in the alleged scheme, identifying victims and analyzing bank records.

Soref faced up to six years in state prison if convicted on the remaining two counts.

Licata’s daughter Maddalena Stodart testified at a preliminary hearing in December that she and her mother invested $315,000 in the scheme based on assurances that it was safe. Seward persuaded investors to cash in annuities early, exposing them to harsh penalties, the Los Angeles Times reported in 2015. Seward promised returns of 10 percent to 18 percent, the Times said.

Stodart said she suspected the scheme was fraudulent after months of getting the runaround. In the summer of 2012, her fears were confirmed when she learned Soref had filed for bankruptcy.

The elementary schoolteacher told Cartaya at the preliminary hearing that the losses hit her mother hard.

“Mentally, my mom was very distraught,” Stodart said.

The defendants offered investors “double-digit returns,” and some investors lost as much as $395,000, prosecutors said.

In a civil lawsuit filed in 2012, the California Department of Corporations sued Soref and Seward. Seward offered free seminars and one-on-one consultations, the state said, and lured investors by telling them she “was tired of seeing seniors being taken advantage of by the financial industry.” Seward said she would sell her million-dollar home before investors would lose a penny, the complaint alleged.

In 2014, Soref reached a civil settlement with the state; he did not admit to any wrongdoing.

A website called the “Michelle Seward Truth Story” purports to explain her side of it. The home page of the site says that Seward, a former Scientologist, met Soref while they were both members of the church and that he has refused to acknowledge his part in the scheme.

“Seward has had to stay quiet for quite some time, due to existing litigation and fear of retaliation from the Church of Scientology,” the website states.

Soref said his reputation was damaged by the charges, that there is more to the story and hinted that legal action could follow. He said Seward and her brother LeClair were both involved. Seward was the insurance agent and executive of Protégé Financial and Insurance Services and Saxe-Coburg Insurance Solutions, entities identified in court records.

Starring Simon Back and Paz Vega “Not Forgotten” grossed $142,055 worldwide after a limited 2009 release, according to Box Office Mojo.