MCEG Told to Pay $113 Million in Fraud Suit

Financially strapped Management Co. Entertainment Group has been ordered by a Texas court to pay $113 million to the makers of the science fiction film “Communion.”

The judgment was made in a San Antonio court late Wednesday. MCEG subsidiary Virgin Vision Ltd., which distributed the 1989 film, was found guilty of breach of contract and fraud against Pheasantry Films and Bancannia Film Distribution Party Ltd.

District Court Judge Michael Peden ruled that the producers are owed $1.5 million in unpaid earnings from the film. The remainder of the judgment was for damages incurred by the two companies.

Oliver Heard, who represented the producers, said he does not know how the judgment will be resolved, since MCEG is already deeply in debt. Trey Martin, MCEG’s attorney, said an appeal is being considered. “We feel that the relief granted was rather harsh,” Martin said.

“Communion,” a $7-million film based on the best-selling novel by Whitley Strieber, starred Christopher Walken and Lindsay Crouse and told the tale of a man’s purported contact with aliens.

MCEG received distribution rights to the film, which reportedly made most of its money from video rentals, when it purchased Virgin Vision last year. Heard said MCEG refused to abide by the terms of the distribution contract and would not provide an accounting of the film’s revenues, thereby causing Pheasantry, which has offices in San Antonio, to file suit.

The judgment comes as yet another blow to MCEG. The Santa Monica-based company, best known for producing the hit film “Look Who’s Talking,” is seeking to restructure its finances.