NEWARK (CN) – Film financier David Bergstein defrauded an investor of $85 million after he partnered with Bergstein to produce “Before the Devil Knows You’re Dead,” the man claims in Federal Court.
Paul Parmar and Grange Consulting Group sued Bergstein, Pineboard Holdings, five other people and three businesses, alleging fraud, economic duress, misappropriation of trade secrets and tortious interference.
According to the complaint, Bergstein approached Parmar in September 2006, seeking a $10 million loan for the movie “Before the Devil Knows You’re Dead,” which starred nonparty Philip Seymour Hoffman.
“Parmar agreed to make the loan after Bergstein presented detailed due diligence on the pre-sales and estimated sales figures, stating that the loan would be repaid in full with interest and fees in less than nine months. Upon closing that $10 million loan from Parmar, Bergstein started a relationship with Parmar concerning what were presented as a rapidly increasing set on great loan opportunities,” according to the lawsuit.
From 2006 to 2008, Parmar says in the complaint, he loaned Bergstein and his companies more than $65 million to produce films, acquire film libraries and to use as working capital.
“Pursuant to the contracts, most of the funding provided by Parmar was to be repaid by late 2007 or early 2008, based on explicitly stated maturities or repayment dates. As those repayments began to fall due, Bergstein started refusing to take Parmar’s calls. In short, Bergstein did to Parmar what plaintiffs intend to show at trial that he typically does to investors and lenders in these circumstances, i.e. Bergstein ‘went dark,'” the complaint states.
Parmar claims Bergstein told him that if he reduced the amount owed from more than $80 million to $24 million, he would be able to secure enough funding, from a person identified only as “Simon,” to pay him over an 18-month period.
“Bergstein presented Parmar with a Hobson’s choice: either accept a reduction in amounts owing (based on the premises that ‘Simon’ would accept no other terms) or Bergstein would be forced to file for bankruptcy (in which case Parmar might see very little or nothing.” (Parentheses in complaint.)
But Bergstein reneged on that deal and suggested another restructuring plan, decreasing the amount owed from $24 million to $18 million, Parmar claims.
“Bergstein timed this new offer to coincide with escalating capital calls upon and financial commitments of Parmar – all of which Bergstein had gained knowledge of while he was cozying up to Parmar and taking his money,” the complaint states. “Parmar was in default on payments for aircrafts and houses in Florida, New Jersey, Switzerland and Texas in which he had over $5 million in equity. Parmar was in desperate need of cash flow, and Bergstein utilized that fact to compel Parmar to accept an unconscionable reduction in the amounts he owed. If Parmar agreed to the reduced debt, Bergstein further promised that he would use his own contacts to assist Parmar in negotiating a solution to the various debts and obligations of Parmar which had in the meantime matured and/or begun to proceed into foreclosure.”
Bergstein reneged on that deal too, Parmar says in the complaint.
In desperate need of cash, Parmar says he entered into a purchase and sale agreement with Bergstein, in which his company, the individual defendants and Pineboard Holdings, would get the assets of Parmar’s medical billing company, MdTablet, in exchange for a scheduled payment plan.
Bergstein reneged again, when Parmar protested the plundering of Pineboard’s assets, according to the lawsuit.
Eventually, Parmar says, he agreed to release Bergstein from any liability for the $85 million in exchange for a $2.2 million payment that was due under the Pineboard purchase agreement.
“The Pineboard purchase agreement provided for the sale of the properties and the assets of MDT to Pineboard,” the complaint states.
When Pineboard came in to remove the $4 million in equipment it obtained through the sale, servers belonging to Parmar and Grange were also taken, Parmar claims.
“Bergstein wanted to seize possession of the Grange/Parmar servers because he believed that they would contain recordings of telephone conversations and meetings that he had with Parmar in which Bergstein revealed notorious schemes,” the complaint states.
Parmar and Grange seeking punitive damages for fraud, economic duress, misappropriation of trade secrets and tortious interference.
They are represented by Kavneet Sethi with Robinson Brog Leinwand Greene Genovese & Gluck, in New York City.
Also named as defendants are Robert B. Silverman, Albert Hallac, Jeffrey Hallac, Lawrence Twersky, Weston Capital Management, Sovrin Health Systems, Alex M. Weingarten and Weingarten Brown LLP.
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