Rick Gates’ side-job producing a handful of D-list films has come back to haunt him in the case brought against him by Special Counsel Robert Mueller.
Whether Gates’ Hollywood dealings would attract the attention of Mueller has long been a question and it appears now that they have, as a separate fraud case brought in New York against some of Gates’ film producing associates is now causing Gates problems in his own criminal case.
The New York case involves allegations that a group of producers bamboozled investors, including a reality TV star, using falsified bank statements and other fraudulent means, to convince them to back film projects the producers claimed they were attached to. The producers instead would allegedly use the investors’ funding for personal expenses — such as homes, time shares, club memberships, and clothing — as well as to pay back other investors growing suspicious of their sham projects.
The issue Mueller has raised in Gates’ case is that Gates shares an attorney with one of the producers in the New York case, Steven Brown. According to court filings last week, the two shared financial relationships that Gates failed to disclose to Mueller’s team as they hash out a bail deal. Additionally, Gates put up as a bail guarantee Brown’s brother Marc, who told Mueller’s team he felt a “duty” to support Gates because they belonged to the same fraternity (though not at the same college).
Prosecutors have now asked a judge to review the potential conflict of Gates and Brown sharing the attorney, Walter Mack, in their respective cases, with a hearing on the issue scheduled for next week.
Mack did not respond to TPM’s request for comment.
The Film Fraud Scheme
A June 2016 federal indictment against Brown — and his two alleged co-conspirators in the case, James David Williams and Gerald Seppala — alleged that the three secured more than $12 million in financing for film-related projects they promised investors would earn them guaranteed returns and a share of the projects.
That money was instead allegedly diverted to personal expenses, including restaurants and their children’s tuition. To convince investors to participate in the financing, the men allegedly would show falsified falsified screenshots of transactions they said showed they had put up their own money as well.
A 2014 civil lawsuit previously brought in California by one of the investors adds more details to the alleged scheme. In in it, the investor, Bill Busbice, of the A&E reality show “Country Buck$” said he was first approached by the men in April 2013, offering him an opportunity to invest in a documentary project they called “Made in America.” After being emailed screenshots of a transaction purporting to show that Williams had put up $500,000 of his own money for the project, Busbice agreed to match it with his own $500,000.
The screenshot was a fake, and the account attached to the film project would contain no significant funds beyond what had been transferred in by Busbice, according to his lawsuit. Most of was quickly wired out and used for purposes not related to the documentary film, Busbice alleged.
According to the civil suit, Williams would later use similar tactics to secure a total of $10.9 million from Busbice for what were described as promotional deals connected to “The Letters,” a film about Mother Theresa; the straight-to-video Christmas movie “Angels Sing,” starring Harry Connick Jr.; and Christian apocalypse flick “Left Behind.” The lawsuit was settled, with Williams and Brown ultimately ordered to pay $6.95 million and $3.5 million respectively to Busbice.
Williams, Brown and Seppala were arrested last year in the criminal case, which includes allegations that other investors were defrauded in addition to the claims previously brought by Busbice. Williams pleaded guilty earlier this fall, while Brown continues to face charges of fraud, attempted fraud and money laundering
Gates’ Connection To The New York Case
The New York film scam case is now being dragged into Mueller’s case against Gates due to what the prosecutors described as Gates’ and Brown’s “shared multiple financial and business interests.”
Their “long-term personal and business relationship” raises the possibility that Gates or Brown could be witnesses in their counterpart’s cases, prosecutors said.
Prosecutors pointed to a $50,000 transfer from Bade, LLC, a Gates-run entity, to Plainfield Pass, a company the producers told an investor was attached to one of the film projects in the New York case. Bade, LLC is among the entities Mueller alleges that Gates and Paul Manafort, the former Trump campaign chairman who has also been charged in Mueller’s probe, used to hide money made lobbying for a pro-Russian Ukrainian political party. Bade, LLC was also listed as a recipient of Republican National Committee funding for what appears to be for work Gates did for President Trump’s 2016 campaign, McClatchy reported.
At one time Brown did work for the lobbying firm run by Gates and Paul Manafort. DMP International paid Brown a total of $40,000 in 2012 and 2013 for “political and media out reach” for its client, Ukraine’s Party of Regions, according to disclosure forms filed by the firm.
The recent Mueller filings reference another Ukrainian connection:
“In addition, during the period at issue in the New York indictment, Brown and Williams repeatedly discussed, including in meetings with Gates, the possibility that Gates would arrange for certain Ukrainian clients to invest in a print and advertising fund for film distribution, to be run by Brown and Williams.”
According to Mueller’s filing, Brown and Gates allegedly shared an interest in MAP Global Holdings, a company behind the film 2017 film “Walk Of Fame,” which starred Clint Eastwood’s son Scott. The film is one of three that Gates is listed as a producer of on IMDB.
Brown and Gates are partners at MAP Global Holdings, where they each “share recourse liabilities in the amount of $3,355,125 and $3,355,126, respectively,” according to prosecutors.
Those and other film-related assets and liabilities “do not appear to have been included in Gates’s personal financial statement submitted to the government as part of his bail package,” Mueller’s court filing said. Mueller’s team has told the judge in Gates’ case repeatedly that it is struggling to pin down Gates’ net worth in order to hash out a deal to release him from house arrest.
The potential conflict of his lawyer is not the only issue Gates is facing in connection to the New York film fraud case.
In filing earlier this month, Mueller noted that Gates had listed as a surety for a potential bail package someone who was already listed as a surety an unnamed defendant in a New York case. That surety, it turns out, is Marc Brown. Mueller’s team sounded less than convinced of his reasons for supporting Gates in a filing last week that said they “seemingly do not have a significant relationship” and they had “not had regular contact over the past ten years.”
“In an interview with the Special Counsel’s Office on November 16, Marc Brown listed as a reason for seeking to support Gates that they belonged to the same fraternity (although they did not attend the same college) and that, as such, he felt duty bound to help Gates. Of note, Marc Brown’s financial assets were significantly lower, almost by half, than previously represented by Gates,” the filing said.