Lawsuit Features Accounting Practices of a Nicolas Cage Film

By Ken Berry 

Nicolas Cage has faced plenty of tax troubles in the past. The IRS has been chasing after the renowned actor for tax debts for years. According to the Business Insider, he currently owes over $14 million. Now a new lawsuit is targeting the accounting practices of one of his films.
 
Cage starred in the Bad Lieutenant: Port of Call – New Orleans, a crime drama released in 2009. The film garnered some critical acclaim but wasn't a success at the box office.  According to an article posted on December 9 by The Hollywood Reporter, Polsky Films, a film production company founded by brothers Alan and Gabe Polsky, filed a lawsuit in Los Angeles Superior Court against Nu Image and First Look Studios.  
 
Here's the gist of what the complaint says: Polsky Films spent $1.3 million to finance and advertise the movie for domestic distribution. As part of the financing agreement, the two studios were required to pay all U.S. proceeds from the film into a separate bank account. The agreement limited deductions to home video packaging, freight, and delivery expenses.
 
Once the funds were funneled into the bank account, the proceeds were supposed to be distributed based on a specific plan. Besides reimbursing its own prints and advertising (P&A) contributions, Nu Image wasn't permitted to pocket any money until residuals, bank financing, and the Polskys' own P&A contributions were recovered.
 
But that's not what happened according to the complaint. The Polskys say that the studios failed to properly establish the collection account, and exhibitors and licensees didn't pay proceeds into it. Instead, they allege that expenses were improperly deducted, proceeds weren't disbursed, and the funds weren't accurately and truthfully accounted for.
 
Avi Lerner, head of Nu Image, and Trevor Short, former CEO of First Look Studios, were named as codefendants in the complaint. The lawsuit also alleges that the defendants fabricated P&A expenses for their own benefit and to the detriment of the plaintiffs. The Polskys are demanding compensatory damages and, as a result of the breach, are also seeking to be awarded the distribution rights to the film.
 
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