How Failed Movies Are Making Money

hello everyone my name is bradley and

this is some sub a channel about how to

survive in the online jungle now first i

want to ask you a pretty simple question

have you been to the movies lately and

i'm talking about the whole setup the

big screen popcorn and surround sound

well look first the pandemic then the

streaming services that became an

integral part of our routine seriously

reduced the income of hollywood studios

but i want to talk to you about an

income stream of the film industry that

is

unrelated to the sale of tickets or the

sale of films via the internet i'm

actually interested in how financial

fraudsters can use the dream factory of

hollywood for financial crimes and i'll

start with

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i'm going to start the story with the

film in which this word was used exactly

569 times and yet this didn't prevent

the filmmakers from receiving five oscar

nominations have you guessed which one

this was yet well yes it's the wolf of

wall street

of course i'm sure that you've heard of

this film the brilliant dicaprio in the

role of a charming fordster in the

director's chair right we've all heard

of it and watched it the script was

actually based on the autobiography of

jordan belford a new york broker and

also money laundering specialist so

what could go wrong i mean the film was

a success right worldwide it bought in

about 400 million dollars despite the

fact that it cost the creators only 100

million

but hold on a minute

it turns out that this film cost roughly

half of james cameron's titanic and okay

the zlitzang was released in 1997 and

the dollar was worth more than that it

is now but also in 2013 another film

featuring dicaprio appeared on screens

the great gatsby cost the creator's only

five million dollars for it is filled

with

a variety of different complex computer

effects and also luxurious costumes so

what did the money really go towards in

the film adaptation of the memoirs of a

financial fraudster

i mean maybe the drugs in the frame were

real right

of course not the drugs in the scenes

were fake but the scammers behind the

scenes were real

let's go back to 2007 where the story of

this film first began

no one wanted to invest in the script

and a significant part of it was vivid

description of financial crimes and the

rest of the time was occupied by parties

with drugs naked women and alcohol

nobody was interested in this

in 2012 the company red granite pictures

found 100 million dollars for filming

this production company was famous for

its luxurious office on sunset boulevard

it contained unique cinematic artifacts

such as a poster from the premiere of

the film metropolis by franz lang which

was in itself worth a million dollars

unfortunately the company's own

successes were not at all impressive by

that time it released only one film

friends with kids a simple romantic

comedy that grossed just about 13

million at the box office

there was also another film in the works

the crime drama out of the furnace with

a budget of 22 million but that movie

flopped at the box office and collected

less than 15 million so how did such an

inexperienced company manage to find 100

million dollars for a risky production

about the wolf of wall street well it's

all about the identity of the founders

red granite pictures was founded by a

businessman from kentucky joey mcfarland

and the stepson the prime minister of

malaysia riza aziz now they were brought

together by another malay businessman

joe lowe

low became the key individual in the

whole story he was born into a wealthy

family who did business in mining and

also alcohol trading he studied in

london where he made acquaintance with a

whole load of influential families and

then he started investing in particular

he actively participated in the affairs

of the malaysian sovereign wealth fund

or 1 mdb

officially he was never on the board of

directors of 1mdb but later american

investigators would find evidence that

lowe was involved in many of the fund's

key transactions and more specifically

the financing of the production company

red granite pictures low knew many

celebrities throughout the world of show

business he presented kim kardashian

with a white ferrari as a wedding gift

right for instance he spent more than

eight million dollars on jewelry for the

victoria's secret model miranda care and

what works by picasso for leonardo

dicaprio

low hosted these incredible parties and

he effectively underneath asian gatsby

doesn't all of this sound a lot like the

story of the brilliant wine connoisseur

rudy kenyawan who i spoke about in the

video about money laundering via luxury

goods

well in this case the fairy tale also

didn't last very long

by 2014 the first pieces of evidence

were appearing that low was involved in

schemes of embezzlement of significant

amounts of money from one mdb

in 2016 police confiscated the

properties of the asian tycoon and

celebrities began returning their

expensive gifts can you believe that and

soon red granite pictures was also

charged with financial fraud the

production company decided to

acknowledge the accusation of the us

government and admitted that its

activities were illegally financed by

the 1mdb funds well this confession cost

the company a whopping 60 million

dollars in fines and this was a serious

blow to the company's reputation

and since 2017 it hasn't released a

single film

however you need to understand that low

laundered relatively small amounts

through films participating in red

granite pictures was a great way to

provide access to say some of

hollywood's most famous actors and

directors but the main flow of dirty

money was through real estate channels

experts from the department of justice

have suggested that low took part in a

disappearance of at least two billion

dollars

every year more and more evidence of

asian gatsby's financial crimes

materializes

however we're unlikely to get any

answers from him for many years now he's

been hiding out somewhere in asia he's

said to have been seen in macau china

but the chinese authorities reject all

accusations of harboring low but anyway

back to dirty filmmaking because this is

what we're focusing on very dirty

filmmaking

have you ever heard of the movie deep

throat

well i hope you're at least 18 years old

otherwise i'm probably going to have to

ask you to watch one of their other

videos maybe the one about how real

hackers differ from the ones in movies

and tv series right there's a link to

that one in the video description it's

quite good but look if you are over the

age of 18 let's continue

now the plot of this movie could only

take place in new york and only in the

crazy 70s in those days the big apple

was ruled by five mafia clans or

families

surely you're familiar with the movie

the godfather right with marlon brando

and al pacino so the model for their

protagonists were real criminal families

just in the movies they changed their

surnames little so that's why the real

corleones were called banano the

gambinos were hiding behind the name

natalia and the heroes of our story

actually had the same name colombo not

cuneo in 1972 a member of the colombo

clan named louis bucci perena invested

22 and a half thousand dollars in

shooting a porn movie

now in those days it was quite a

profitable and respectable business to

be in the films were shot on amateur

film cameras and played in underground

cinemas

richer americans could actually order

copies of the films and arrange a

private viewing

deep throat could have remained one of

dozens of similar pawn films if the

impossible hadn't happened

the colombo family took advantage of the

bureaucratic delays and delayed the

procedure for assigning age ratings

thanks to this prano managed to show the

film in ordinary commercial cinemas its

success was overwhelming huge queues

formed outside the box office and

celebrities were spotted among the first

in the audience for example actor jack

nicholson and the author of breakfast at

tiffany's truman capote a review of the

film appeared even in the very

conservative new york times the hype was

incredible but it's the film's revenue

that's really interesting here according

to the director deep throat earned 600

million dollars at the box office now

this can't be anything but alarming in

1970 about 203 million people lived in

the united states a movie ticket cost

about two and a half dollars turns out

that deep throat was watched by every

single inhabitant of the country

including babies young girls priests

mormons and the blind tell me your

secret or i killed you

despite the fact that at most the film

was shown in only half of the states how

could such an incredible sum of money be

explained well the colombo family may

well have taken advantage of the

popularity of the film to legalize their

criminal proceeds it was easy enough to

negotiate with the owners of cinemas and

sell themselves huge numbers of tickets

right and then return the money to

yourself as the creator of the most

profitable movie in history

of course this is

you know impossible to prove after so

many years but the scheme is quite

plausible in the 70s another fraud

scheme related to film production

flourished in new york an aspiring

director and screenwriter dan gordon was

involved in a similar story in 1971 he

began filming for the movie potluck the

budget was about 100 thousand dollars

which is provided by one of the mafia

families and gordon shot illegally on

the streets of new york he worked

constantly on script edits to meet

deadlines and budget restrictions but

this didn't garner much enthusiasm at

all among investors on the contrary as

the filming neared its end the

relationship between the director and

the family representatives was only

worsening

gordon couldn't figure out what was

going on until he found out the terrible

truth

according to accounting documents a

whole million dollars was invested in

this film the mafia had hoped that the

young director would not be able to cope

and that the film would be declared as

unfinished of course in this case all

the fake investments would have landed

in the pockets of the criminal producers

gordon was deeply frightened by this

discovery and ran away from new york at

the first opportunity

he actually served as an officer in the

israeli armed forces for almost 10 years

and only actually returned to america in

the early 80s fortunately the potluck

story had already been forgotten by that

time gordon eventually returned to

screenwriting and actually went down in

hollywood history as the author of

passenger 57 hurricane and rambo the

last blood so although in this case dan

gordon did not agree to working for the

mafia the history of cinema knows the

name of a director who was proud of

helping companies evade taxes if you're

a fan of computer games such as alone in

the dark postal or far cry then you

probably already know who we're talking

about so meet the winner of the golden

raspberry 2009 in the domination for

worst director of the year ue bowl

unsuccessful films happened to all

directors but only uebol managed to have

such an absolute lack of box office

receipts let's take a look now in 2003

he shot house of the dead with a budget

of 12 million dollars but the film

barely collected 13. two years later

alone in the dark is released which cost

say 20 million but collected only half

of this amount

in 2007 in the name of a king a dungeon

siege tale appeared on screens the

budget of this dark fantasy grew to 60

million dollars and yet it collects just

13 million at the box office

now it appears that the budget is

growing and yet revenue remains at the

same level

would you invest your own money in films

by such an unsuccessful director well

yes you would if you worked in germany

and you were trying to dodge high taxes

the secret here lies in the desire of

the german government to create its own

film industry if german companies

invested their money in the film

industry then that money wouldn't be

taxed whatsoever moreover in the event

of a financial failure of the resulting

film the state will compensate for part

or all of the funds spent now do you

understand how much of a neat scheme

this actually turns out to be instead of

paying your taxes you invest money in

the work of a weak director he returns a

significant part of these funds through

your own offshore company or spends on

say intangible services of other

companies and with the remaining money

he makes a bad film that flops at the

box office in the state then compensates

you for your unsuccessful investments

now for you everything's in the black

but not for the government in fact ue

bowl is not a unique phenomenon in

cinema hollywood studios have also been

taking advantage of the shortcomings of

german legislation for years do you

remember another film adaptation of a

game tomb raider with angelina jolie as

laura croft simon west's film cannot be

compared to the creations of uebol

that's for sure with a production of 94

million dollars and at the box office

the film raked in almost 300 million

dollars you can't exactly call it a

failure but bowls films are combined

with tax-exempt funding schemes american

journalist edward j epstein estimated

that the direct costs of paramount for

the production of tomb raider was only

seven million dollars so how is that all

possible well actually it's all about

tax legislation epstein gives the

following figures at first in order to

take advantage of the benefits the

american company solved the film that

hadn't actually been shot yet for 94

million dollars to the german company

the newcom group the german company

immediately signed the counter lease

agreement with the americans for 83

million

so as you can see filming hasn't even

begun and paramount has already acquired

more than 10 million

oh my god

the company actually repeated a similar

deal with english partners although

actually in order for that to take

effect it was necessary to shoot i think

several scenes in the uk but this saved

them a further 12 million dollars the

company compensated for the remaining 65

by pre-selling the rights to rent the

future film in countries where the game

about lara was particularly successful

so distributors from japan spain france

italy and of course germany and england

joined the project that's all the studio

had to find less than 10 million to

shoot a blockbuster based on a popular

game with one of hollywood's biggest

stars in the title role this is really a

win-win situation of course such a tax

haven could not last too long the first

the german government blocked benefits

to foreign companies and then it came to

ua bowl's german colleagues the maestro

of appalling film adaptations himself

stopped making films in 2016. they say

that he tried to produce other people's

work but he quickly got tired of it now

ball is enjoying a well-earned rest

according to the net worth portal his

wealth is estimated to 10 million

dollars

not bad at all for a man who hasn't made

a single profitable movie in his

lifetime

i think you'd be pretty naive to think

that government officials and aml

specialists are not aware of all of

these stories the names of uebol louis

parano and joe lowe are very familiar to

any expert in the sphere of combating

financial fraud

but this doesn't mean that scammers are

idly sitting about

they're constantly looking for more and

more schemes to legalize criminal

proceeds if you type in the search bar

the phrase bollywood money laundering

you'll find some interesting and

sometimes outright frightening schemes

that are used in indian cinema

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hollywood accounting is an already

well-established term that describes

complex and opaque schemes reducing

taxes recalculating profits and

inflating expenses

and thanks to the ability of financial

consultants unprofitable films can bring

their creators very good money and

leading pictures the opposite as a kid i

loved harry potter i mean who didn't

right

my favorite movie was actually harry

potter in the order of the phoenix but

can you imagine how surprised i was when

in search of material for today's video

i came across this document

now if this is true then the film which

grossed almost a billion dollars

bought warner brothers losses of 167

million

to be honest i really don't want to

believe in such a scheme after all i'd

love to see real magic in hollywood

movies and not tax evasion schemes this

is

a lie it's not a lie i saw it but i

would like to draw your attention to

another issue

what do you think which branch of the

economy in the coming years may be the

locomotive of money laundering

in which industry are unrealistic

investments concentrated and the human

factor becomes critically important

where can one person's mistake cost

hundreds of millions of dollars

of course this is i.t

but in my opinion the market situation

has changed significantly in the recent

years the recent collapse of theranos

the scandals with google and meta make

fraud and high-tech companies

not so easy as one would first believe

regulatory and tax authorities keep too

much of a close eye on them

but there is a sub-sector of it that has

budgets comparable to hollywood film

studios but at the same time doesn't

feel the pressure of inspection bodies

i'm talking about the development of

computer games

translating into common someone [ __ ]

made off with nearly 20 tons of my gold

and all the lighter stuff and you

you can be the judge right the budget of

cyberpunk 2077 was 314 million dollars

wake the [ __ ] up samurai

we have a city to burn

now this is a number comparable to

blockbusters such as avengers infinity

war or pirates of the caribbean at

world's end the game failed massively at

its launch and subsequently brought down

cd projekt's red shares and received

only 68 on metacritic so what did a huge

scandal break out followed by an

investigation of financial activities or

mass complaints from investors

no

it's just that something didn't work out

for polish programmers things happen

similar stories actually happened with

gta the trilogy definite edition no

money no funny bunny honey anthem and

bloodlines too and even battlefield

2042.

don't you think that game developers

would face a whole wave of high-profile

financial revelations in the coming

years i'd like to be wrong but for some

reason the situation in game dev reminds

more and more of that sort of tax fraud

riddled history of hollywood

well anyway my name is bradley and

thanks for tripping with me on this

teeny tiny topical and tropical

telephonetic tenderhearted trial through

the tantalizing fantasizing intense twig

escapes of the online jungle i'll see

you in the next video

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you