Parker is under scrutiny from state financial regulators for a 10-year, $10 million fundraising effort connected to his yet-to-be completed film, Birth of Innocence.
Regulators with the Department of Banking, Insurance, Securities and Health Care Administration contend the agreements signed between Parker and his financiers were securities and therefore should be registered by the state, and Parker should have had a license to sell them.
In its amended legal complaint filed Wednesday in Washington Superior Court, BISHCA adding the allegations of securities fraud, and claiming Parker lied to potential financiers by failing to disclose he would use some of the money for personal use, and that he was paying millions to a silent partner.
In a statement emailed to the media yesterday, Parker asked the state to sit down and work out an amicable deal rather than continue with the court case.
"I have already amassed $100,000 in legal bills, with no end in sight. Because I do not immediately have the money to pay these bills (and because, under the state’s restrictions, I am not even allowed to raise it), my law firm may not be able to continue to represent me. I have no idea how much this action is costing the taxpayers of Vermont," wrote Parker in note titled "Open Letter to the State of Vermont."
In fact, Parker himself is not allowed to raise any additional money right now as the state has frozen his assets. A group of lenders banded together this year to raise money to help defray Parker's legal bills.
During a press conference several weeks ago, a handful of investors said they did not mind that Parker used some of their money to pay for his own expenses. In fact, they expected him to earn a living while making the film.
The state claims Parker made "material untrue statements that he maintained a life insurance policy for the benefit of investors at an amount sufficient to pay back all providers of capital."
The $2.5 million face value of Parker's life insurance policy was not sufficient to repay investors of the project, and from at least July 2007 to January 2010, the primary beneficiary was Parker's wife.
Parker's attorney said the state's new allegations came as a shock.
"We don't believe the fraud allegations are viable, especially given the state's consistent assertion all along that they didn't believe Mac had committed fraud," said Wanda Otero-Ziegler, an attorney with Langrock Sperry & Wool. "It's also quite odd because we had just begun to have settlement discussions. This is quite a turnaround and not sure what's driving it."
The state contends that Parker owes a couple hundred financiers as much as $10 million in principal and interest payments — and at interest rates ranging from 5 to 30 percent. People have given Parker a wide range of funds, from a low of $100 to a top-end amount of $500,000.
Of that amount, Parker estimates $3 million went to his co-creator, silent partner and “mentor”: Connecticut-based chiropractor Dr. Louis James Soteriou. Soteriou went incommunicado when news of the state probe became public earlier this year.
According to officials at the Connecticut Department of Public Health, Soteriou's chiropractic license expired in August, 2007 due to non-renewal. His last known address was in Roxbury, Connecticut.
"In the course of soliciting investors and selling securities, defendant failed to disclose to investors that on a regular basis he transferred substantial sums of investor money to a person never identified to investors but now variously described by defendant as a 'friend', 'silent partner', and 'collaborator'," the state alleges in its amended complaint.
In his statement, Parker admitted that he made a mistake in trusting Soteriou, but claims the money he raised from individuals came in the form of loans, some of which he has already repaid. The repayments came from money raised from new backers.
"I also bear responsibility for my situation. In retrospect, I wish I had done more research and gotten legal advice before entering into these financial agreements with my friends and neighbors. And I made the painful mistake of trusting an individual who has turned out not to be worthy of my trust," said Parker.
The state also claims Parker used the money to pay off his own bills, something he failed to tell financial supporters when he asked them for money.
"Defendant used money raised from investors to pay hundreds of thousands of dollars in personal expenses that included his mortgage, property taxes, utilities, car payments, credit card accounts in both his name and that of his spouse and other items not related to the project," the state alleges in its amended complaint.
At a press conference last month, investors who sat beside Parker and defended his actions, and the film's financing, said they had no problem with Parker using some of their money to defray personal expenses.
Parker said he needs at least another $50,000 to complete the final editing of the film, and hopes the state will work out a deal to allow that to happen. If he is unable to complete the film, Parker and his supporters claim, he will be unable to repay the money.
Today, only a five-minute trailer of the film is available online, but Parker said a much longer version has been screened to financiers. The trailer consists of a New Age-style monologue delivered by Parker as images of idyllic natural scenes slowly fade into smiling, peaceful faces.
The next hearing is scheduled for May 6, but Otero-Ziegler hopes to delay that date by a month in order to respond to the state's new charges.
"For most of my adult life, I have been an ambassador for Vermont through my stories, my writing, and my films. I love this state, and I love the people who live here," wrote Parker in his statement. "Birth of Innocence is my most ambitious project yet, and my hope is that it too will reflect beautifully on our state and our people. How ironic that an agency of this state I love so much is now spending taxpayers’ money trying to prove that I’m a bad guy."
Photo by Caleb Kenna
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