A group of unhappy Australian investors are suing Village Roadshow Limited over their US$17.9m (A$23m) worth of tax leveraged investments in the first of the high-earning Matrix trilogy.

The group, hardly beginners, are current and former partners of KPMG in Australia, the leading business and taxation advisory firm. They including the current CEO Lindsay Maxsted and a former Chairman David Crawford.

They had formed the partnership Groucho II: Matrix (Production) with two Village subsidiaries, Medborne and VR International Pictures. However this particular Groucho Club had failed to deliver, they claim, beyond an immediate taxation advantage.

Group spokesman John Nicholls says "the success of The Matrix exceeded expectations and it is reasonable to expect a return on our investment".

The investors claim that the Village subsidiaries failed to maintain proper accounts and records, significantly raised the movie's budget without consultation and failed to give the group any interest in the two high-earning sequels.

"In its annual report for 2001," say the plaintiffs to proceedings instituted in the Supreme Court of Victoria, "Village stated The Matrix 'just goes on and on earning and earning'". But not for them.

The Village corporate website has announced the company's intention to "vigorously defend" itself. "The Company does not believe," it says, "that these proceedings will have any material effect on its financial position."