Judge Guts $21 Million Ponzi Case Against Filmmaker

LOS ANGELES (CN) — A Los Angeles Superior Court judge Monday dealt a devastating blow to the case against a film director charged in a $21.5 million Ponzi scheme, finding prosecutors filed all but two counts in the criminal complaint outside the statute of limitations.

County prosecutors accused 66-year-old Israeli filmmaker Dror Soref and insurance agent Michelle Seward of persuading elderly investors to part with their life’s savings to invest in the Soref-directed thriller “Not Forgotten” and a musical called “Twist,” using a glossy coffee-table book in a hard sell at investors’ homes.

Soref faced up 75 years in state prison. But to the delight of his friends and family in the courtroom, Judge Michael Pastor gutted the 72-count criminal complaint ruling that authorities were on notice of the alleged scheme by mid-2011 and should have filed the complaint by late 2014. Prosecutors waited until October 2015 to charge Soref and Seward, who struck a plea agreement in exchange for testifying against Soref.

Pastor also released Soref on his own recognizance. His bail had been set at $2.7 million, then reduced to $350,000, Soref’s attorney Bryan Altman said.

Soref’s friends and family at the back of the courtroom smiled and gasped at Pastor’s ruling. After the hearing, Soref exchanged hugs with his supporters but declined to comment.

Altman said his client had been “through hell” and that he would move to dismiss the remaining two counts.

“We’re going to give it some teeth by really pointing to specific testimony from specific victims, alleged victims, where to a man or to a woman they said they’ve had no dealings with Mr. Soref at all,” Altman said.

Deputy District Attorney Renee Cartaya said she was disappointed by the ruling, and that her office had to take several steps before it could file a criminal complaint, including contacting businesses involved in the alleged scheme, identifying alleged victims and analyzing bank records.

The 72-count complaint against Soref included allegations of securities fraud and sales of unregistered securities.

The surviving counts include 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.

Soref pleaded not guilty to all the charges. If convicted of the remaining counts he faces a maximum sentence of 6 years in state prison.

Prosecutors say that from 2007 until 2010 Soref promised investors high returns but the payments never came, or the defendants used new investors’ money to pay off earlier investors.

Pastor said his ruling was a legal determination and not a reflection on the alleged victims’ testimony.

“I believe them,” Pastor said. “They were honorable people.”

Witness Maddalena Stodart testified at a preliminary hearing last year that she and her mother invested $315,000 in the scheme believing the investment was safe and secure.

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

But during the Monday morning hearing, Altman said prosecutors had paraded their best witnesses in court without making a direct connection to his client.

“The DA represented to multiple courts that the overwhelming evidence was that he was substantially more culpable [than Seward], and not one witness identified any connection with him involved in their purchase of their securities,” Altman said after the hearing.

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 and lured investors by telling them she “was tired of seeing seniors being taken advantage of by the financial industry,” the complaint stated. She said she would sell her million-dollar home before investors would lose a penny, the state alleged.

In 2014, Soref announced he had reached a civil settlement with the state to “avoid the expense and uncertainty of further proceedings.” He did not admit to any wrongdoing.

“From the time I set out to make ‘Not Forgotten’ in 1999 until it was filmed in 2008, my intentions were that of any artist: to make the best film possible. I served as co-writer, director and one of the film’s producers, and I’m extremely proud of how it turned out,” Soref said in a statement.

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

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