SEC Charges Florida Film Production Company and Its CEO with Fraud
Litigation Release No. 25166 / August 13, 2021
Securities and Exchange Commission v. The Movie Studio, Inc., et al., Case No. 0:21-cv-61686 (S.D. Fla. filed August 13, 2021)
The Securities and Exchange Commission today announced charges against The Movie Studio, Inc., a microcap company based in Fort Lauderdale, Florida that purports to engage in film production, distribution, and content-streaming, and its President and CEO, Gordon Scott Venters, for fraudulently raising at least $1.2 million from retail investors.
According to the SEC's complaint, from approximately August 2016 to March 2021, The Movie Studio and Venters issued materially misleading press releases regarding The Movie Studio's ownership, production, distribution, and licensing of films. The Movie Studio also allegedly hired sales agents, trained and supervised by Venters, to solicit investors using scripts provided by Venters. The complaint alleges that The Movie Studio falsely made itself appear more successful than it really was. Among other misrepresentations, the complaint alleges The Movie Studio and Venters:
- exaggerated the number of films The Movie Studio owned;
- made it appear that films would be released soon when, in fact, The Movie Studio had filmed only enough content to make a trailer;
- falsely claimed to own a production studio; and
- represented, without any basis, that The Movie Studio utilized blockchain technology in the distribution and licensing of films.
The complaint further alleges that The Movie Studio and Venters dumped shares of The Movie Studio stock on the public markets after issuing at least one misleading press release. As alleged, only a fraction of investor funds went towards The Movie Studio's film production business. The complaint further alleges that Venters misappropriated investor funds for his personal use and to pay commissions to sales agents for recruiting investors.
The SEC's complaint, filed in federal district court in Florida, charges The Movie Studio and Venters with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the registration provisions of Sections 5(a) and (c) of the Securities Act. The complaint also charges Venters with violating the broker-dealer registration provisions of Section 15(a)(1) of the Exchange Act, and with acting as a control person of The Movie Studio under Exchange Act Section 20(a). The SEC seeks disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and permanent injunctive relief, as well as penny stock and officer-and-director bars against Venters.
The SEC's investigation, which is ongoing, is being conducted by Michelle Bosworth with assistance from Lina Fernandez, and supervised by Thierry Olivier Desmet and Glenn Gordon in the Miami Regional Office. The SEC's litigation is being led by Alise Johnson and supervised by Andrew O. Schiff.