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November 30, 2012

Entertainment Executive Sentenced to 5½ Years in Federal Prison in Multi-Million Dollar Stock Fraud and Scheme to Bilk Investor

Filed under: Los Angeles Criminal attorney — Tags: , , — fayarfa @ 9:04 pm

LOS ANGELES – A Hollywood producer who founded and ran various television production and distribution companies was sentenced today to 66 months in federal prison for crimes committed in two cases – one involving stock fraud and another stemming from a scam that bilked an investor in one of the companies.

Drew Savitch Levin, 59, of Pacific Palisades, was sentenced by United States District Judge Dean D. Pregerson, who also ordered Levin to pay $2,272,588 in restitution to 13 victims in the United States, France, Austria, England and Switzerland.

At the sentencing hearing, Judge Pregerson described statements submitted by victims: “It is a picture of Mr. Levin being essentially completely out of control and using his charm and sizable intellect to lie to people and take their money, and continue to feed that engine of whatever it was that he thought he was going to be able to accomplish. And maybe in his mind he felt that it would all come out fine in the end, but it was a scorched earth strategy, and that’s clear. And when you read the letters about the promises that were made once notes were due…those are lies, clearly. And you see that time and time again.”

Levin pleaded guilty in September 2011 in one case to conspiring to inflate the revenue and stock price of Team Communications Group, Inc., a West Los Angeles-based company that Levin founded and for which he served as CEO until early 2001.

After being forced out of Team by the company’s board of directors, Levin went on to run other TV production companies. In the second case, Levin pleaded guilty to wire fraud and admitted he bilked a French investor who put 80,000 Euros into a Levin-run company in 2008.

Levin was initially charged in the Team Communications case in March 2008. He was free on bond until September 2010, when he was arrested for violating the terms of his release by committing the new fraud against the French investor. Levin was re-released on bond in November 2010, but he was incarcerated again in March 2011 for again violating the conditions of his bond.

“Levin is a dangerous economic menace who cannot be trusted,” prosecutors said in court documents. “For more than a decade, he has struck time and again – against victims for their money, against the laws of society, and against the orders of this court.”

According to court documents, Team, whose shares were traded on the NASDAQ stock exchange, was in the business of producing and distributing television programming, including made-for-television movies. As part of its distribution business, Team licensed its programming to other companies for distribution fees. Levin perpetrated a scheme to falsely overstate Team’s revenues to make the company appear to be profitable, when in fact it was operating at a substantial loss. For example, when Team licensed television programming for inflated distribution fees and the customers were unable to pay the fees, Levin had Team send them millions of dollars of Team’s own money, which the customers then used to make payments to Team. These “circular payments” were disguised by routing them through third parties and by ostensibly using them to buy television programming.

Levin personally profited from the revenue-inflation scheme in several ways, including by taking a $335,000 bonus based on Team’s reportedly profitable 1999 performance, and by pledging more than 500,000 shares of Team as collateral for a loan to buy a $1.5 million luxury vacation home in Big Sky, Montana.

In 2001, Team restated its 1999 fiscal results, going from a profit of nearly $1.8 million to a loss of $4.25 million. For 2000, Team reported a loss of nearly $43 million. When the company’s stock price tumbled as a result of the disclosure, more than $84 million of Team’s market capitalization was erased. Team filed for bankruptcy protection in 2002.

In the second case, Levin solicited money from the French investor in November 2008, while he was free on bond after being indicted in the Team case. The investor sent 80,000 Euros, and Levin promised that he would repay 100,000 Euros by June 2009. When the deadline arrived and Levin did not repay the money, the investor filed a lawsuit in Ireland, where Levin’s company was incorporated, to liquidate the company and try to recover his money. To stall the liquidation proceeding, Levin sent the investor bogus bank documents to make him believe that the money was on its way. The investor temporarily adjourned the liquidation proceeding, but the money never arrived.

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