FBI Probes Financing of Films Made by Samaha

Film producer and nightclub owner Elie Samaha is under criminal investigation by the FBI for possible fraud, representatives for Samaha acknowledged Wednesday.

The FBI probe into the financing of films made by Samaha’s Franchise Pictures--including “Battlefield Earth,” starring John Travolta, and “3000 Miles to Graceland,” starring Kevin Costner--stems from a civil case brought against Samaha by former partner Intertainment Licensing, according to lawyers for both sides.

In that case, Intertainment alleges that Samaha defrauded the German television company out of $75 million through a scheme using multiple sets of books for each movie. “If that’s not a crime, it should be,” said Intertainment attorney Scott Edelman.

Said Samaha’s attorney, Brian Sun: “We are aware of the FBI inquiry and intend to fully cooperate. We are firmly of the view that this is a not a criminal case. This is a civil business dispute.”

A spokesman for the U.S. attorney’s office declined to comment on the probe. There have been no criminal indictments in the case.

Samaha’s relationship with Intertainment dates back to his first major studio film, “The Whole Nine Yards,” starring Bruce Willis, released in 1999. Intertainment Chairman Ruediger “Barry” Baeres then signed a deal to finance 47% of Samaha’s next 60 films.

That deal fell apart a year later amid accusations from both sides of fraudulent representations.

Samaha built his reputation in Hollywood first as the owner of Celebrity Cleaners and then with his nightclub on Sunset Strip, the Roxbury. He now owns the Sunset Room.

Parlaying the Hollywood friendships he formed through his clubs, Samaha was able in 1999 to lock up a distribution deal with Warner Bros. Pictures. Warner Bros. pays nothing toward the production costs of Samaha’s films but distributes them in the U.S.

Samaha has become a major contributor to Warner Bros., producing nine movies for the studio in the last three years with an additional six set for release this year and next. The slate of films is renowned for being consistently poor performers in theaters.

A Warner Bros. spokeswoman declined to comment on the revelations of an FBI probe.

In May, a federal district court refused to dismiss two RICO, Racketeer Influenced and Corrupt Organizations Act, claims brought against Samaha and another Franchise executive. The Intertainment case is set for trial November 2002.