While charging his employees for office coffee, IntertainmentLicensing CEO Rudiger "Barry" Baeres spurned repeated requests to put aproduction auditor on film sets where the budgets were being fraudulentlypumped for tens of millions of dollars, said his former co-managing director ina federal courtroom Tuesday in Santa Ana, California.
On the day both sides rested their cases in the 42-month legal warrevolving around Intertainment's $100 million fraud claims against FranchisePictures, David Williamson resumed his attack on his ex-boss while alsotempering earlier remarks about Baeres' supposed knowledge of the fraudulentbudget scheme that Franchise CEO Elie Samaha claimed took place with Baeres'tacit participation.
On Tuesday, both Edelman and Franchise lawyer William Pricepainstakingly examined the way Baeres terminated Williamson, who became thestar witness for Franchise in the trial.
Williamson told the jury of a trio of complaints he took to anIntertainment supervisory board member in May 2001.
The complaints involved the diluting of Intertainment shareholderstock value in the summer of 2000 by Baeres taking out a $48 million loan fromJ.P. Morgan with $65 million worth of Baeres' personal stock as collateral(stock that was subsequently dumped after J.P. Morgan learned that Baeres'relationship with Samaha was on the rocks), Baeres' alleged subsequent movingof money into a Cayman Islands bank account, and Baeres' alleged castigation ofWilliamson for not lying in an arbitration proceeding.
The day after voicing the complaints,Williamson said he wastold to cease work for Intertainment immediately.
A year after settling his Intertainment employment contract inFebruary 2002, Williamson, who said Tuesday that he still "has a number ofpersonal issues with Barry Baeres", began meeting with Samaha andSamaha's lawyers. It was during those meetings, Williamson claimed, that hebegan suspecting Baeres had not told him the whole truth about theIntertainment CEO's budget- pumping scheme.
On the other hand, Williamson awkwardly attempted to clarifyearlier testimony that seemingly indicated Baeres had early knowledgeofSamaha's pumped budget scheme.
On Tuesday, Williamson said that even though he thought "Baeresalways knew about the multiple budgets, neither Barry nor I had any reason tobelieve that there was fraud" until another Intertainment employee allegedlyuncovered the fraud in September of 2000.
On the Franchise side, the date that Samaha and Baeres allegedlyentered into a secret oral agreement has been a moving target since the trial'sApril commencement.
In an interview with Screen International after Tuesday'shearings, Samaha said that his secret deal with Baeres to pump the budgetsbegan in February of 1999 on the film Battlefield Earth.
Samaha had previously testified that the oral agreement began inMay of 1999 after a Franchise-Intertainment output agreement was signed inCannes, and also testified that a film made in 1998 had a budget that waspumped with Baeres' knowledge.
Samaha also said he looked forward to the end of the litigationwith Baeres, which, after Wednesday's closing arguments, will go to the juryfor a verdict. (For Intertainment to prevail in its various fraud claims, thenine-man jury must vote unanimously on the claims.)
"Franchise is in the movie business, not the lawsuit business,"said Samaha. "[After the trial's conclusion], we'll make less movies, bettermovies; and we won't be the slaves of Intertainment just to drive up theirstock price."
An Intertainment source, speaking on the condition of anonymity,denied Williamson's claim that Baeres didn't want an Intertainment productionauditor on the Franchise film sets, and said that the only truth in Samaha'sstatement was "that Franchise is making less movies. But they're just biggerbombs."
Also on Tuesday, the settlement agreement between former Franchisepresident Andrew Stevens and Intertainment was entered into the court record.In exchange for being dismissed from the fraud lawsuit, Stevens paid Intertainment$1 million.
His lawyer Richard Schirtzer said that Stevens settled withouthaving to give any statements in support of Intertainment in their upcomingarbitration against Franchise-lender Comerica Bank.
"Andrew justsettled for what he would have had to pay lawyers to do the trial," saidSchirtzer.