Dispute Arises Over ‘Three Stooges’ Project

Do Moe, Larry and Curly have a role to play in the Heidi Fleiss scandal?

That’s the question some Hollywood executives asked Monday as attorneys in a lawsuit against Columbia Pictures said they are formally looking into suggestions that the studio used “Three Stooges” movie development money for “improper executive entertainment.”

Gregg Homer, who represents the “Stooges” heirs in the Columbia suit, confirmed rumors that development expenditures are being scrutinized based on evidence recently gathered in the case.

“We are currently investigating whether Columbia charged improper executive entertainment expenses against the ‘Three Stooges’ project,” Homer said in a phone interview. “If and when we determine that these improper charges were made, we will take appropriate action.”

Homer declined to elaborate, but other sources said there are substantive indications that “Stooges” development money may have been spent on Fleiss, whose arrest has rocked the entertainment community. At issue is more than $200,000 in studio funds, sources added.

The news seems to represent another poke in the eye to Columbia Pictures, which is already the source of intense speculation about possible ties to Fleiss. The studio declined to comment Monday. Louis M. Meisinger, Columbia’s outside counsel in the “Stooges” case, said he was unaware of the development money issue.

“There’s been no formal allegation made (about improperly used development money) and I have no information that it’s a claim,” Meisinger said. “As of now, the pleadings don’t frame that issue or even intimate that it is an issue. . . . It’s a completely new issue as far as we are concerned.”

Meisinger added that Columbia is about to file a lengthy response and counterclaim to the “Stooges” suit. On background, sources said the studio had been preparing a suit of its own over the rights to the “Stooges” characters before the heirs went to court.

Columbia reportedly launched its own investigation into the Fleiss case recently.

Studio sources say the investigation is ongoing but that no wrongdoing has been found. The studio has been trying to regain its focus in the midst of the continuing rumors and press queries involving Fleiss, recently naming Lisa Henson as its new production chief as part of that process.

Meanwhile, the Fleiss case continues to spawn new developments. Reports surfaced last weekend that the Internal Revenue Service and the U.S. attorney’s office are also investigating Fleiss, who pleaded innocent last week to five counts of felony pandering and one drug count.

The “Stooges” lawsuit adds yet another strange wrinkle to the case. Some sources say the suggestion of improper spending connected with the movie project could be a ruse designed to force Columbia into a quick settlement. But other sources close to the studio denied that.

The “Stooges” lawsuit was filed in Los Angeles County Superior Court this month. It alleges that Columbia failed to follow through on an agreement to make a movie or series of movies based on the “Three Stooges” characters after entering into a 1988 agreement with companies representing two sets of heirs, Norman Maurer Productions and Jeffrey Scott Productions.

According to the suit, Columbia requested several extensions of the agreement between 1988 and 1992. Last year, the heirs denied future extensions and demanded that Columbia exercise its rights or give them up, the suit says. They also withdrew the studio’s merchandising rights. However, the suit charges that Columbia subsequently sold three “Stooges” videos anyway.

In a July 19 letter to the studio, attorney Homer repeated the heirs’ claim that Columbia had breached its contract by selling the videos. He also charged that Columbia was trying to force the heirs to agree to the merchandising deal to ensure that the film would be made.

And the “Stooges” controversy doesn’t end there.

In a related matter, the relatives of Stooges Larry Fine and Curly Joe DeRita have a pending lawsuit against Maurer and Scott in which they allege that they are owed as much as $5 million in merchandising and marketing profits from the Three Stooges trademark.

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Turner on Track: Class A shares in Turner Broadcasting jumped $2 a share to $23.50 on the American Stock Exchange, and New Line Cinema rose 50 cents a share to $17.25, on reports that Turner’s board will approve his acquisition of New Line when it meets in New York today.

Sources confirmed a Hollywood Reporter story saying that Time Warner Inc., a 20.6% shareholder in Turner Broadcasting System, is exploring an asset swap with Turner as part of the deal, a $300-million stock swap. Those assets reportedly include the Cartoon Network and Hanna-Barbera, although sources said the swap might not occur right away.

Turner has also reached terms to buy Castle Rock Entertainment for about $100 million as part of his plans to build a Hollywood presence. But sources reported that as of late Monday, 44% Castle Rock shareholder Sony Pictures still had not signed off on the deal.

The discussions between Sony and Castle Rock are said to be continuing. Sources expect an agreement to be reached that would allow Sony’s Columbia Pictures to continue distributing Castle Rock films for several years.