Financial Institutions accuse them of $90 Million Fraud
Readers of Qweerty.com were amongst those who were probably not surprised to learn that Merrill Lynch and Bank of America were suing the powerful Los Angeles-based Regent Entertainment for fraud.
Over a period of months, the writers at Queerty had been exposing Regent’s sketchy business practices, which included not paying their freelance workers. That was small potatoes compared to what came next.
Last Thursday, in the Los Angeles Superior Court,Regents was socked with a blistering 57-page lawsuit accusing them of taking out fraudulent loans from the banks for nonexistent projects. The plaintiffs are alleging that loans, which they made to pursue distribution agreements and movie deals, went instead into the pocketbooks of upper management personnel.
Merrill Lynch and Bank of America is seeking $90 million in damages, a figure reached based on the monies it had fronted the company since 2005, when it first advanced $50 million to allow Regents to acquire film and licensing agreements.
Regent Entertainment is the parent company of gay media titans, The Advocate, Out magazine, Gay.com, Here! TV, and Alyson Books. The Chairman and CEO of the Regent Group of Entertainment Companies, Stephen Paul Jarchow, and his business partner Alan Colichman, are named as defendants in the meticulously detailed lawsuit.
The complaint reads, in part: "Defendants knew that these marketing and release strategies and distribution budgets would never be adhered to or executed and that they were inappropriate for the scope of the, more often than not, low-quality straight to DVD film titles, but submitted them to Plaintiffs anyway."
To support its funding requests, Jarchow and his partner are accused of purposely sending bogus documents to Merrill to fraudulently induce the funding, lending authenticity to otherwise undercapitalized shell entities.
The allegations also include a claim that Regent “knowingly created unreasonable, inflated—and possible fake—release strategies, financial projections, marketing strategies and film distribution budgets.”
Another example of the funding fraud involves ‘Here!’ the gay entertainment subscription channel. In that allegation, Regents is accused not only of defaulting on its loan payments, but falsely altering those notes to extend its payment obligations from 18 months to up to 20 years, all without permission from Merrill Lynch. Jarchow is also the chairman of Here!
One of the movies Regents released had been ‘Gods and Monsters.’ But Queerty is releasing a storyline about the entertainment giant with the headlines ‘Frauds and Monsters: A Rogue’s Gallery of Regents Players” Here is what they say about the company now being sued:
“Have you overindulged with booze? Or boys (or both)? Hiding a raging crystal meth addiction? Perhaps you lied under oath to keep your big-time movie studio boss out of jail, only to find that no one on the lot wanted to work with you after that? Maybe you've done things that are even more heinous—and then bragged about them in public? If so, you may find a career on the Regent Media executive team!”