A Canadian film producer has been arrested and charged with seven counts of wire fraud after allegedly engaging in a Ponzi scheme by using US$100 million in investor funds to repay prior investors.
According to an indictment unsealed by the U.S. Attorney’s Office in the Northern District of Illinois, from 2019 to 2026, 60-year-old Jason Cloth of Beverly Hills, Calif., solicited various clients to invest in film and entertainment projects.
“Cloth fraudulently obtained more than $100 million from (an) Illinois investment advisor, the advisor’s clients, and other investors based on false representations about the performance and value of their investments,” a press release said on Wednesday.
“Cloth knew at the time of the investments that he would use the money for other purposes, including the development of a real estate project in Canada,” the release added.
Cloth, who operates the Canadian-based Creative Wealth Media Finance Corp., was arrested Tuesday in Los Angeles where he made an initial court appearance, according to the release.
Prosecutors are seeking at least $12.25 million from Cloth for the projects identified in the indictment.
A Hollywood fraudster
A prolific Hollywood businessman, Cloth is credited with producing more than 70 feature films, including “Joker,” “Judas and the Black Messiah,” “The Man from Toronto” and “Ghostbusters: Afterlife.”
According to his biography on IMDb, Cloth joined the B.C.-based production company BRON Studios in a key financial and investor-relations role in September 2014.
BRON Studios, a subsidiary of BRON Media Corp., later partnered with Cloth’s Creative Wealth Media Finance Corp. and both companies sought creditor protection in 2023.
In 2023, BRON Studios filed for creditor protection in the Supreme Court of British Columbia and Chapter 15 bankruptcy protection in the U.S.
However, BRON Studios was linked to a separate fraud scheme through an April 2023 report by the American Bar Association, alleging that $100 million in investor money, was used to finance loans to BRON productions.
A few months later, Creative Wealth Media Finance Corp. was declared bankrupt through the Ontario Superior Court of Justice, and a trustee was appointed to oversee its estate.
Allegations surrounding Cloth’s alleged schemes gained wider attention later in March 2024, when a Florida jury found he had defrauded an investor in the TNT docuseries “The Pathway” of $6.6 million, according to Variety. Cloth was ordered to pay $19.6 million after failing to appear at trial.
He said both his companies filing for bankruptcy and other financial difficulties prevented him from being able to afford a defence lawyer.
Around the same time, he was facing a class-action lawsuit in Chicago, alleging he defrauded investors of more than $80 million in films including “Ghostbusters: Afterlife” and “Monkey Man,” Variety also reported.
