Beautifully engraved certificate from the Cannon Group Incorporated
in 1987. This historic document was printed by the Security-Columbian Banknote Company and has an
ornate border around it with a vignette of two allegorical people standing by the Cannon Group logo. This item has the printed signatures of the Company’s President(Yorum Globus ) and Chairman of the Board (Menahem Golan ) and is
over 29 years old.
The Cannon Group, Inc. became the largest independent film producer in Hollywood in the mid-1980s. International financier Giancarlo Parretti and his former partner, Florio Fiorini, acquired control of Cannon in 1989 from the Israeli filmmaking team of Menahem Golan and Yorum Globus after the company ran into serious financial problems.
The following is a press release from the United States Attorney regarding Parretti and Florio Fiorini.
United States Attorney
Central District of California
October 12, 1999
FORMER MGM CHAIRMAN AND CEO ARRESTED IN ITALY
IN $1.5 BILLION ENTERTAINMENT INDUSTRY FRAUD
International financier Giancarlo Parretti and his former partner, Florio Fiorini, have been arrested by Italian authorities on charges stemming from their control of the Hollywood entertainment companies The Cannon Group, Inc. and Pathe Communications Corporation, and their takeover of MGM/UA Communications Company.
Parretti, 57, the former head of Cannon, Pathe and MGM, was arrested yesterday in Orvieto, Italy. Fiorini, 58, who served as chairman of the three entertainment companies, was arrested today outside Milan, Italy. Both are being held for extradition to the United States under the terms of the U.S.-Italy extradition treaty.
The arrest was based on a 55-count superseding indictment that was unsealed today in United States District Court in Los Angeles. The indictment was returned by a federal grand jury in November 1998, but had been sealed while the United States Attorney’s Office prepared the necessary documents to secure Parretti and Fiorini's arrest and extradition.
The indictment of Parretti and Fiorini was announced today in Los Angeles by United States Attorney Alejandro N. Mayorkas, FBI Assistant Director in Charge James V. DeSarno, and IRS Criminal Investigation Division Special Agent in Charge Wayne A. McEwan.
In addition to Parretti and Fiorini, this case involves a number of well known names in the entertainment industry. Those include:
? The Cannon Group, Inc., the publicly traded entertainment company which became the largest independent film producer in Hollywood in the mid-1980s. Parretti and Fiorini acquired control of Cannon in 1989 from the Israeli filmmaking team of Menahem Golan and Yorum Globus after the company ran into serious financial problems.
? Pathe Communications Corporation, which was the name Parretti gave Cannon in the midst of aborted efforts to take control of the famous French movie company Pathe Cinema S.A. in 1988.
? MGM/UA Communications Company (now known as Metro Goldwyn Mayer, Inc.), the publicly traded Hollywood studio that Parretti and Fiorini purchased from its controlling shareholder, Kirk Kerkorian, for approximately $1.3 billion in November 1990.
? Credit Lyonnais S.A., the state-owned French bank, which became the largest bank in Europe in the 1980s. After wrestling control of MGM from Parretti in 1991, the bank pumped more than $1.5 billion of French taxpayers’ money into the troubled studio before selling it back to Kerkorian.
? Credit Lyonnais Bank Nederland N.V. (CLBN), the Dutch subsidiary of Credit Lyonnais, which was a major lender to independent film producers throughout the 1980s and early 1990s, and was the principal source of financing for Parretti and Fiorini’s ventures in Hollywood and Europe.
The 94-page indictment charges Parretti and Fiorini with conspiracy, securities fraud, filing false reports with the U.S. Securities and Exchange Commission, falsifying the books and records of Pathe and MGM, and making false statements to Pathe and MGM’s independent auditors. The indictment charges Parretti alone with international money laundering and subscribing to false income tax returns. (See attached outline of the charges and statutory penalties.)
The indictment alleges that Parretti and Fiorini, with the support of CLBN and later Credit Lyonnais itself, used a variety of fraudulent and illegal schemes to acquire control of Cannon from Golan and Globus, to falsely enhance Cannon/Pathe’s financial condition, and to purchase MGM from Kerkorian. The schemes, as detailed in the indictment, are as follows:
1. Between mid-1987 and 1989, Parretti and Fiorini, through a number of their European affiliates, acquired a controlling interest in Cannon, whose shares were publicly traded on the New York Stock Exchange. In gaining control of Cannon, Parretti and Fiorini made false statements to the SEC and to the investing public about the source and nature of the funds they were using by failing to disclose that virtually all of those funds had been borrowed from CLBN. In addition, Parretti and Fiorini allegedly attempted to bribe CLBN officials to influence their lending decisions relating to Cannon and other ventures in the United States and Europe.
2. Beginning in December 1989, Parretti and Fiorini caused Cannon, which had been renamed Pathe, to sell movie theaters it owned in the United Kingdom and the Netherlands to a Dutch company named Cinema 5 Europe N.V. for approximately $232 million. Cinema 5 borrowed $185 million of the purchase price from CLBN. The transaction resulted in a $90 million gain on Pathe’s books.
In reports filed with the SEC and in statements to the press, Parretti and Fiorini represented that Cinema 5 was an independent company belonging to the Fininvest Group, the European entertainment conglomerate of former Italian Prime Minister Silvio Berlusconi. In truth, Cinema 5 was a shell company that Parretti and Fiorini secretly controlled through a complicated organization of foreign companies and nominee directors. By essentially selling the theaters to themselves at a fraudulently inflated price, Parretti and Fiorini were able to falsely enhance Pathe’s financial condition, as well as help CLBN deceive Dutch banking regulators by shifting $185 million in bad debt from their own companies to what appeared to be a new borrower.
3. In March 1990, Pathe, with financial backing from Time Warner, launched a friendly tender offer to acquire MGM, whose stock was also publicly traded on the New York Stock Exchange. When Time Warner pulled out of the deal in June 1990, the tender offer was restructured into a merger of MGM into Pathe. The merger closed on November 1, 1990, with Pathe paying approximately $1.3 billion to acquire MGM. The merger closed only after the Century City, California valuation firm of Houlihan Lokey Howard & Zukin, Inc. issued a favorable “solvency opinion” based, in part, on representations by Parretti and Fiorini that there was sufficient equity in the deal so that MGM and Pathe would be able to maintain normal operations following the merger.
In reality, as the indictment alleges, there was virtually no equity in the deal. Parretti and Fiorini secretly pledged Pathe and MGM assets to Credit Lyonnais and CLBN, and used undisclosed guarantees, sham transactions, false and forged documents, and a series of complex international transfers of funds to make more than $500 million in debt appear to be equity. In the end, more than $1.1 billion of the money used to purchase MGM came from secret loans by CLBN and Credit Lyonnais.
4. Between November 1990 and mid-1992, Parretti engaged in a scheme to loot MGM by diverting more than $15 million in corporate funds and the European rights to the MGM “roaring lion” logo to an Italian company he and his wife controlled.
As alleged in the indictment, Parretti and Fiorini's conduct deceived the investing public, obstructed the SEC in its duty to enforce the federal securities laws, destroyed Pathe as a viable company, and subjected MGM to involuntary bankruptcy. The collapse of Pathe and MGM exposed creditors, shareholders and bondholders of the two companies to hundreds of million of dollars in losses. Ultimately, most of these losses were borne by Credit Lyonnais and, because it is a state-owned bank, by French taxpayers.
The indictment also accuses Parretti of filing false tax returns for 1989 and 1990. The indictment alleges that Parretti failed to report substantial income in these returns, including approximately $162,000 he had embezzled from MGM, and took an improper personal deduction for a $750,000 charitable contribution to the Museum of Broadcasting in New York that was actually made by one of his companies with money borrowed from CLBN.
“No matter how complex the case, we will devote our resources to ensure that sophisticated financial frauds, even those that cross international borders, are met with vigorous prosecution,” said United States Attorney Alejandro N. Mayorkas. “This investigation proves our commitment to protecting the public from such frauds, and proves that the law enforcement agencies in all parts of the world can join forces to achieve this objective.”
James V. DeSarno, Assistant Director in Charge of the Los Angeles Field Office of the Federal Bureau of Investigation, said: “This highly complex and unprecedented investigation is an excellent example of how U.S. federal regulatory agencies and law enforcement agencies from around the world can work together to identify and bring to justice criminals who engage in illegal activity across international borders.”
“This case represents one of the most complex international fraud cases that the IRS Criminal Investigation Division has been involved in and shows the increasing factor of the international element in white-collar crime,” said Wayne A. McEwan, Special Agent in Charge of the IRS Criminal Investigation Division in Los Angeles. “The IRS Criminal Investigation Division will continue to investigate these types of cases and will not allow the difficulties and complexities of international financial fraud cases to impede its investigations and its pursuit of white-collar criminals.”
Parretti and Fiorini's arrests and the related settlements with Credit Lyonnais and Pathe are the product of an extensive investigation by the Federal Bureau of Investigation and the Criminal Investigation Division of the Internal Revenue Service, with assistance from the SEC, as well as authorities in Belgium, France, Israel, Italy, Luxembourg, Monaco, the Netherlands, Spain, Switzerland, and the United Kingdom.
An indictment contains allegations that a defendant has committed a crime. A defendant is presumed innocent until and unless proven guilty.
Below are some the movies the Cannon Group produced:
10 to Midnight, 2 Pick-Up, Africa Express 1989)
African Express (1989)
Alien from L.A. (1987)
American Ninja (1985)
American Ninja 2: The Confrontation (1987)
American Ninja 3: Blood Hunt (1989)
American Ninja 4: The Annihilation (1991)
American Ninja V (1993)
American Ninja 5 (1993) (USA)
Appointment with Death (1988)
Beauty and the Beast (1987)
Borrower, The (1991)
Braddock: Missing in Action III (1988)
Dangerously Close (1986)
Death Wish 3 (1985)
Death Wish 4:
The Crackdown (1987)
Doin' Time on Planet Earth (1988)
Down Twisted (1987) 5.1/10 (41 votes)
Exterminator 2 (1984) 2.8/10 (86 votes)
Fifty/Fifty (1993) 4.3/10 (35 votes)
Fool for Love (1985)
Frog Prince, The (1988)
Going Bananas (1987)
My African Adventure (1987) (USA)
Grace Quigley (1984)
Ultimate Solution of Grace Quigley, The (1984)
Guess What We Learned in School Today? (1970)
Hanoi Hilton, The (1987)
Hot T-Shirts (1979)
Journey to the Center of the Earth (1989)
King Solomon's Mines (1985)
Kinjite: Forbidden Subjects (1989)
Masters of the Universe (1987)
Mata Hari (1985)
Mercenary Fighters (1987)
Freedom Fighters (1987)
Messenger of Death (1988)
Missing in Action (1984)
Murphy's Law (1986)
Naked Cage, The (1986) Wild Cage (1986)
Naked Face, The (1984) Nana (1982)
Nana, the True Key of Pleasure (1982) (UK)
Nana: La vera chiave del piacere (1982) (Italy)
Outlaw of Gor (1989)
Outlaw, The (1989/II)
Over the Top (1987)
Rescue Me (1993)
Street Hunter (1993) (USA)
Savage Weekend (1979)
Upstate Murders, The (1979)
Shy People (1987)