Canadian Hollywood financier Jason Cloth has been arrested in Los Angeles after being charged for allegedly defrauding investors of more than $100 million.
Cloth, who boasts executive producer credit on the blockbuster hit “Joker,” was arrested on Tuesday by the FBI.
He was charged with seven counts of wire fraud in an indictment unsealed in a District Court in Chicago, according to a press release by the U.S. Department of Justice (DOJ) published Wednesday morning.
Each count of wire fraud is punishable by up to 20 years in federal prison. Cloth has yet to face trial.
He made his initial court appearance on Tuesday in Los Angeles, and was ordered released on $200,000 (U.S.) bond, FBI spokesperson Laura Eimiller confirmed to the Star.
Cloth, 60, is alleged to have fraudulently raised money from investors for movie and TV productions through his Toronto-based company Creative Wealth Media Finance Corp.
Cloth did not respond to the Star’s multiple attempts to reach him Wednesday.
According to the indictment, Cloth obtained hundreds of millions of dollars from an investment advisor, their clients, and other investors in Illinois while making false representations about the performance and value of the investments.
“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 DOJ’s release reads.
He is also alleged to have been running a Ponzi scheme by using new investor money to repay older ones, according to the release. The indictment is seeking forfeiture from Cloth of at least $12.25 million (U.S.).
Along with “Joker,” Cloth helped finance “Licorice Pizza,” “Greyhound,” starring Tom Hanks, and the 2019 drama “Bombshell,” which featured Margot Robbie and Nicole Kidman.
In January, the Star reported on Canadian investors who say they lost their retirement savings after investing with Cloth’s company, which went bankrupt in 2023.
Solly and Moise Vanounou say they invested a total of $800,000 over several years.
Every once in a while, the couple would send Creative Wealth cheques worth tens of thousands of dollars. And every month, the company would send installments of an annual return that amounted to 12 per cent of their total investment.
In hindsight, Solly said, it all was “too good to be true.”
At the time, the Ontario Securities Commission (OSC) had alleged that Cloth orchestrated a Ponzi-like scheme and Toronto police were investigating.
Cloth was accused by the OSC of having committed two breaches of Ontario securities law, meaning he could face a maximum administrative penalty of $2 million. He could also be permanently prohibited from becoming or acting as a director of any securities issuer.
Toronto Police spokesperson Cindy Chung confirmed Wednesday that an investigation is still ongoing.
The Royal Canadian Mounted Police said it is aware of Cloth’s indictment but declined to comment on “investigations led by other police services or countries.”
The FBI’s Chicago division is currently looking for other potential victims of the alleged scheme.
The indictment was announced by the U.S. Attorney for the Northern District of Illinois and the acting special agent-in-charge of the Chicago Field Office of the FBI, assisted by the U.S. Securities and Exchange Commission.
