Theater Owners Charged With $500,000 Theft

The operators of a small Los Angeles movie theater chain were charged with grand theft Monday for allegedly underpaying 11 film distribution companies by more than $500,000 in a scheme that involved the under-reporting of box office receipts on such films as “Risky Business,” “Easy Money” and “Twilight Zone.”

Sidney A. Kurstin, 66, of Marina del Rey and his son, Christopher, 33, of Venice are accused of “shorting” the firms--including the nation’s major film distributors--during a five-year period beginning in December, 1979, said Deputy Dist. Atty. Robert M. Youngdahl, who heads the office’s entertainment fraud section.

The Kurstins operate the three-screen Fairfax Theatres at 7907 Beverly Blvd., the two-screen Brentwood Theatres at 2524 Wilshire Blvd. and the single-screen Gordon Theatre at 614 N. La Brea Ave.

Youngdahl said film distributors typically charge theater operators a rental fee of 35% to 45% of the box office receipts for their movies. The Kurstins received money under false pretense, he charged, by reporting receipts of about $3 million when in fact their audited receipts totalled $4.2 million. The unpaid film rentals amounted to $526,693 for the five-year period, the prosecutor said.

Outrage Expressed

“You tell the distributor you didn’t sell as many tickets and therefore you don’t owe as much rent,” Youngdahl said.

Attorney Ralph Saltsman, representing the Kurstins, expressed outrage at the criminal charges, saying his clients are “absolutely infuriated.”

“The distributors overcharged my client, and my client had a dispute as to how much money should be given to the distributors and I honestly thought the matter would be resolved in the civil arena,” Saltsman said. “Everyone resolves these things in a civil court in a civil manner as civilized people, and now we find that the district attorney has been enlisted as a collection agency.”

Saltsman said he believes that his clients are the first in the nation to be charged as felons in a dispute between theater operators and film distributors.

Youngdahl expressed doubts whether this is the first such case, but he acknowledged that there have been no such filings in Los Angeles County for at least 20 years.

Discovered in Audit

The prosecutor said the matter came to his attention when a New York-based auditing firm employed by major film distributors informed authorities of a $50,000 discrepancy that its auditors had discovered. Consequently, a search warrant was issued for the Kurstins’ business records and the remaining discrepancies were discovered, Youngdahl said.

Alleged victims include 20th Century Fox, Columbia, Paramount, Disney, Warner Bros., MGM-United Artists, Universal, Orion, Embassy, Group One and Crown, Youngdahl said.

The Kurstins are also charged with two additional counts of theft for underpaying rent to the owners of the Brentwood and Fairfax theater properties. The rents were to be based on a percentage of box office receipts, and the Kurstins, by under-reporting their receipts, underpaid their rent by about $80,000, Youngdahl charged.

The Kurstins each face up to 10 years in state prison if convicted on the 13 felony counts.