Authorities have arrested two people who allegedly defrauded investors out of $21 million in an elaborate movie investment scheme.
Michelle Kenen Seward, 42, of Flintridge; and Dror Soref, 75, of Los Angeles were arrested on Sept. 11 and charged with operating a "Ponzi scheme" to raise funds for several films, acccording to a statement from the California Department of Insurance.
Seward, a former licensed insurance agent and chief executive of Protégé Financial and Insurance Services Inc. and Saxe-Coburg Insurance Solutions LLC, allegedly convinced her clients to invest their life savings in a film directed by Soref called "Not Forgotten." The independent thriller, released in 2009, starrred Simon Baker and Paz Vega.
Neither Seward nor Soref were licensed to sell securities or provide investment advice, the insurance department found.
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.
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 production of "Not Forgotten."
More than 140 people were victims of the scheme, which operated between 2007 and 2010. Most were retirees living in Los Angeles and Kern counties, according to investigators.
The alleged scheme is thought to be among the most elaborate film investment frauds the department has investigated.
"It's certainly one of the largest Ponzi schemes that I can recall," said Nancy Kincaid, a spokesperson for the state Department of Insurance.
The case is being prosecuted by the Los Angeles County district attorney's office.