Director of 2009 movie flop accused of using Ponzi scheme to fund film

In retrospect, the title of the film seems almost prescient.

Six years after the film “Not Forgotten” was released in a handful of theaters in the United States, Los Angeles County prosecutors have revisited the movie – but only to go after its director and insurer.

The district attorney’s office announced Thursday that the film’s director, Dror Soref, 65, and its insurance agent, Michelle Seward, 43, were charged with 72 counts of being involved in white-collar crime. Authorities allege the two operated a Ponzi scheme to fund the movie.

They were charged with 56 counts of securities fraud, 15 counts of sale of unregistered securities and one count of using a device to defraud a securities transaction. Authorities accuse the pair of operating the scam for three years from 2007 to 2010 and luring in nearly 140 investors, many of them elderly. One victim lost nearly $400,000, prosecutors allege.

“They were promised double-digit returns on their investments that carried no risk,” prosecutors said in a statement.

Seward, a former licensed insurance agent and chief executive of Protégé Financial and Insurance Services Inc. and Saxe-Coburg Insurance Solutions LLC, convinced her clients to invest their life savings in the film, prosecutors allege.

Authorities estimated the total loss at about $21.5 million, some of which they say was used to pay the film’s employees or to repay earlier investors.

Neither Seward nor Soref were licensed to sell securities or provide investment advice, according to the California Department of Insurance.

Nonetheless, Seward convinced clients to cash in their annuities early -- causing them to pay steep penalties -- by promising returns of 10% to 18% on their investment in “Not Forgotten,” according to investigators.

Most were retirees living in Los Angeles and Kern counties, according to investigators.

After the film’s completion, Seward and Soref solicited more funds from investors to produce several films through a company called Windsor Pictures LLC.

However, money used to form Windsor Pictures was instead used to pay back investors in the movie flop.

The alleged scheme is thought to be among the most elaborate film investment frauds the department has investigated.

The pair have pleaded not guilty and are due back in court Nov. 16. They face up to 75 years in prison if convicted on all charges.

As for the movie, “Not Forgotten” was released in four U.S. theaters where it ran for seven weeks and grossed about $54,000, according to Box Office Mojo. It grossed another $88,000 internationally. It received a 15% rating on Rotten Tomatoes.

Staff writer Richard Verrier contributed to this report.

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