SANTA ANA – A Laguna Niguel man was convicted of orchestrating a multimillion-dollar Ponzi scheme to finance B-movies that starred celebrities like mixed martial arts fighter Quinton “Rampage” Jackson and rapper Flavor Fav.
Mahmoud Karkehabadi, 56, was found guilty by an Orange County jury of 51 felony counts of securities fraud and grand theft, plus sentencing enhancements for aggravated white-collar crime and excessive taking.
He now faces a 30-year term in prison at his March 25 sentencing by Superior Court Judge Richard Toohey, Deputy Attorney General Patricia Fusco said.
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But the same jury of six men and six women found co-defendant Timothy Cho, 56, not guilty of 30 felony counts. Cho was president of Newport Coast Entertainment, which raised money to finance Karkehabadi’s movies.
He walked out Toohey’s courtroom smiling. “I’m so relieved,” Cho said. “This has been hanging over my head for two and a half years. It was very scary.”
Karkehabadi, also known as Mike Karkeh, was the owner of Alliance Group Entertainment in Burbank, which made several B-list action and horror films since 2005, including “Confessions of a Pit Fighter” and “Hotel California.” The movies were not financially successful but are still on the market.
Prosecutors in the California Attorney General’s Office contended that Karkehabadi solicited hundreds of people to invest in the movies with misleading promises of quick and high returns on millions of dollars worth of loans, and then paid early investors with funds from newer investors.
Karkehabadi also failed to disclose to potential investors that he had been ordered by the state to pay a $5 million civil judgment for defrauding more than 500,000 people in 2003 in a phony credit card case, a 2010 news release from the Attorney General’s Office said.