Back in 2019, Chris Fenton, production manager of “Iron Man 3,” filed an explosive lawsuit against his former employer DMG Entertainment, a once-successful company that combines Hollywood films and Chinese distribution.
After a legal back-and-forth that included a DMG countersuit that was later dismissed, Fenton’s case finally goes to trial next week and some shady stuff is expected to come to light How China did business in Hollywood before tensions between the U.S. and the communist superpower boiled over in 2021, causing studios to rethink their plans for the market. The Fenton v. DMG case is scheduled to begin in California Superior Court on October 23, with Robert Downey Jr. and tentpole producer Neal Moritz expected to be on the witness list.
Although Fenton, a former William Morris agent who worked at DMG for 17 years, is a respected member of the Hollywood community and is present in Washington, D.C. as a member of the Council on Foreign Relations, his case was viewed as something of a David vs. Goliath fight. It essentially pitted him against a firm with powerful lawyers at Venable and close ties to the People’s Republic of China. But over the next five years, the case was anything but predictable. According to documents filed June 14, Venable abandoned the case and was replaced by two firms, Altview Law Group and Sherman Law Group.
At the heart of the $30 million lawsuit for breach of contract and promissory note fraud is Fenton’s claim that the founders of DMG, valued at $5 billion at its peak, cut him off from funds raised through an initial public offering in 2014 and then ran the company into the ground.
DMG, which first listed on the Shenzhen Stock Exchange in 2014, became a hot target for Hollywood after co-producing and financing films such as “Looper” and the Johnny Depp thriller “Transcendence.” But in 2018, the stock price began to fall precipitously, the same year Fenton reportedly raised concerns about the company’s practices and was ousted from his position as head of the film industry. The company was eventually delisted from the Shenzhen Stock Exchange.
In recent months, details in the Fenton case that were originally redacted have been made public, including DMG’s alleged plan to manipulate a subsidiary’s stock price through bizarre deals to A-list celebrities like Downey Jr. and Moritz. The proposed deal for Downey Jr., whose name was redacted in the original complaint, called for The Iron Man star is expected to raise $20 million annually for three years and later pay $90 million, with the actor being paid $36 million upon his execution. According to recent court filings, DMG founder Dan Mintz also urged Fenton and former DMG general counsel Tom Ara, who is currently co-chairman of DLA Piper’s entertainment division, to propose a similar deal to Moritz. At this time, Moritz was developing the Vin Diesel starrer “Bloodshot,” based on a Valiant comic. (DMG acquired Valiant in 2018.)
According to court documents, Fenton and Ara were concerned that Mintz was trying to artificially inflate the stock price of DMG subsidiary Yinji by reporting revenue from those deals as profit and failing to disclose liabilities. At the time, Moritz’s lawyer reportedly expressed his own concerns that the proposed deal “didn’t pass the smell test.” Both proposals were ultimately rejected by Downey Jr. and the “Fast & Furious” producer.
The lawsuit also alleges that Chinese officials such as former China Film Group boss Han Sanping accepted DMG bribes and that Mintz and co-founders Bing Wu and Peter Wenge loaned Xiao hundreds of millions of dollars through DMG stock were secured, and used the funds to purchase a $20 million mansion in Beverly Hills, a $30 million Bombardier jet and luxury vehicles such as Rolls-Royce, Bentley and Ferrari. In a strange twist, the founders took on millions of dollars in debt to finance experimental regenerative medical treatments, the lawsuit says.
“After five years, Chris and his family are grateful to finally have their day in court,” said plaintiff’s attorney Duane Bartsch.
DMG attorney John Begakis of Altview calls the lawsuit “full of irrelevant and scandalous allegations.” He added: “The reality is that most of Mr Fenton’s claims have already been dismissed, either by the court or at its own discretion, so this dispute now revolves around one simple question: whether, after receiving a generous salary , while costing DMG.” Despite paying millions of dollars for his incompetence during his term, Mr. Fenton is still entitled to a bonus, the nature or amount of which Mr. Fenton cannot even articulate to this day. We believe the facts will speak for themselves and that the truth will prevail.”
Nevertheless, Fenton has already overcome several legal hurdles, including the dismissal of the DMG countersuit. A motion for summary judgment was accepted in his lawsuit in January. That filing contained a wealth of details about Beijing’s soft power ambitions, including the claim that a company it controlled owned almost Taiwan’s only broadcast network – a worrying prospect given the country’s recent saber-rattling toward Taiwan.
“Mintz wanted DMG to purchase Eastern Broadcasting Company (“EBC”), a Taiwanese television network,” Fenton said in a statement filed this year. “To obtain approval from Taiwanese authorities, Mintz needed a letter from a reputable U.S. bank stating that DMG had at least $300 million in a U.S. account. Mintz arranged for the money to be transferred from China to a US account. Mintz didn’t want Taiwanese regulators to know that a Chinese company was trying to buy EBC. Mintz said he would “move money” to that end.
The statement also details how industry players seeking to do business in the Middle Kingdom were forced to hand over control to a Chinese proxy – an alleged practice that left Hollywood stakeholders and US citizens without autonomy over their assets. In the case of DMG, Wenge Xiao, a Chinese national, held the DMG shares on behalf of Mintz, Bing Wu and Fenton. At the same time, the DMG founders took out loans against the DMG shares, the lawsuit states.
Also included in the court filings is a plan of how Chinese companies used various offshore companies to do business with Hollywood. In the case of the Depp film “Transcendence”, DMG Hong Kong Group Limited was used as the company. Likewise, the Chinese government was heavily involved in Hollywood films and shaped the final product. To get Iron Man 3 After the film was released in Chinese theaters, DMG was forced to adhere to China Film Group’s guidelines regarding the number of days a given film would shoot in China, which Chinese actors to cast, the number of Chinese film production crews, and Chinese-owned sound stages had to be booked and, perhaps most problematically, which Chinese-related script elements had to be used. Hollywood has long been criticized for capitulating to the box office giant and censoring itself, from “World War Z” to “Dr. Strange.” “Iron Man 3” grossed a whopping $121 million in China and grossed $1.22 billion worldwide.
With jury selection set to begin Monday, sentiment toward anything China-related could work in Fentor’s favor given the broader landscape of U.S.-China relations. President Biden and his administration have repeatedly stated that the United States would defend Taiwan in the event of a Chinese invasion.
Source : variety.com