February 29, 2024

Back in 2019, “Iron Man 3” production executive Chris Fenton filed an explosive lawsuit against former employer DMG Entertainment, a once-highflying company that bridged Hollywood movies and Chinese distribution.

After a legal back and forth that included a DMG countersuit that was later tossed, Fenton’s case is finally headed to trial next week and is expected to expose some of the opaque ways China did business in Hollywood before tensions between the U.S. and the communist superpower boiled over in 2021, leading studios to reassess their plans for the market. On Oct. 23, Fenton v. DMG is scheduled to begin in California Superior Court, with Robert Downey Jr. and tentpole producer Neal Moritz expected to be on the witness list.

Although Fenton, a former William Morris agent who worked at DMG for 17 years, is a respected member of the Hollywood community with a Washington, D.C., presence as a member of the Council on Foreign Relations, his case was seen as something of a David vs. Goliath struggle. It essentially pitted him against a company with high-powered lawyers at Venable and deep ties to the People’s Republic of China. But over the ensuing five years, the case has been anything but predictable. According to documents filed June 14, Venable quit the case and was replaced by two firms, Altview Law Group and Sherman Law Group.

At the heart of the $30 million breach of contract and promissory fraud suit is Fenton’s claim that the founders of DMG, which was worth $5 billion at its height, had cut him out of money generated by a 2014 initial public offering and subsequently ran the operation into the ground. 

DMG, which was first listed on the Shenzhen stock exchange in 2014, became a desirable destination for Hollywood after co-producing and financing such films as “Looper” and the Johnny Depp thriller “Transcendence.” But its stock price began to drop precipitously in 2018, the same year Fenton allegedly raised concerns about the company’s practices and was ousted from his position as motion picture head. The company was eventually delisted on the Shenzhen stock exchange.

In recent months, details in Fenton’s case that were initially redacted became public including DMG’s alleged scheme to juice the stock price of an affiliate company via bizarre deals offered to A-listers like Downey Jr. and Moritz. The proposed deal for Downey Jr., whose name was redacted in the initial complaint, called for the “Iron Man” star to pony up $20 million annually for three years in exchange for $90 million later, with $36 million paid to the actor upon execution. Recent court filings say DMG founder Dan Mintz also pushed Fenton and former DMG lead attorney Tom Ara, who is currently the co-chair of DLA Piper’s entertainment division, to propose a similar deal to Moritz. At the time, Moritz was developing the Vin Diesel starrer “Bloodshot,” based on a Valiant Comic. (DMG acquired Valiant in 2018.)

Court filings say Fenton and Ara were concerned that Mintz was attempting to artificially inflate DMG affiliate Yinji’s stock price by reporting the revenue from these deals as profit and not disclosing the liability. At the time, Moritz’s attorney was said to have raised his own concerns that the proposed deal didn’t “pass the smell test.” Both proposals were ultimately rejected by Downey Jr. and the “Fast & Furious” producer.

The suit also alleges that Chinese officials like former China Film Group head Han Sanping took DMG bribes and that Mintz and co-founders Bing Wu and Peter Wenge Xiao borrowed hundreds of millions of dollars secured by DMG stock and used the funds to buy a $20 million Beverly Hills mansion, a $30 million Bombardier jet and such luxury vehicles as a Rolls-Royce, Bentley and Ferrari. In a strange twist, the founders took on millions in debt to pay for experimental regenerative medical treatments, the suit claims.

“After five years, Chris and his family are grateful to finally have their day in court,” says plaintiff’s attorney Duane Bartsch.

DMG’s attorney John Begakis at Altview is slamming the suit as “filled with irrelevant and scandalous accusations. He adds, “The reality is that the majority of Mr. Fenton’s claims have already been thrown out, either by the Court or at his own choosing, leaving this dispute with only one simple question: whether, after receiving a generous salary while costing DMG millions of dollars for his incompetence during his tenure, Mr. Fenton is nevertheless owed a bonus, the nature or amount of which Mr. Fenton still cannot even articulate to this day.  We believe the facts will speak for themselves, and that the truth will prevail.”

Still, Fenton has already cleared several legal hurdles including getting DMG’s countersuit dismissed. His lawsuit passed a January motion of summary judgement filing. That motion yielded a trove of details about Beijing’s soft power ambitions including the claim that a company it controlled nearly owned Taiwan’s only broadcast network — a troubling prospect considering the country’s recent saber-rattling on Taiwan.

“Mintz wanted DMG to purchase Eastern Broadcasting Company (“EBC”) a Taiwanese television station,” says a Fenton declaration filed this year. “To obtain the approval of Taiwanese authorities Mintz needed a letter from a reputable U.S. bank stating that DMG had a minimum of $300 million in a U.S. account. Mintz arranged to transfer the money from China to a U.S. account. Mintz did not want Taiwanese regulators to know that a Chinese company was attempting to purchase EBC. Mintz said he was ‘moving money around’ to this end.”

The declaration also outlines how industry players looking to do business in the Middle Kingdom were forced to hand over control to a Chinese surrogate — a rumored practice that left Hollywood stakeholders and U.S. citizens without autonomy over their assets. In DMG’s case, Wenge Xiao, a Chinese citizen, held the DMG shares as a surrogate on behalf of Mintz, Bing Wu and Fenton. All the while, DMG’s founders were taking out loans against the DMG shares, the complaint states.

Also included in court filings is a blueprint of how Chinese companies used various offshore entities to do business with Hollywood. In the case of the Depp film “Transcendence,” DMG Hong Kong Group Limited was the entity used. Similarly, the Chinese government was deeply involved in Hollywood films, shaping the final product. In order to get “Iron Man 3” released in Chinese movie theaters, DMG was forced to adhere to China Film Group’s mandates for the number of days to shoot any given movie in China, what Chinese actors to cast, how many Chinese movie production crew to use, what Chinese-owned sound stages needed to be booked and, perhaps most problematic, what Chinese-related script elements needed to be used. Hollywood has long been criticized for kowtowing to the box-office behemoth and self-censoring on everything from a “World War Z” to “Dr. Strange.” “Iron Man 3” earned a whopping $121 million in China on its way to a $1.22 billion global box-office haul.

With jury selection poised to commence on Monday, sentiment towards anything China-related could play in Fentor’s favor given the broader landscape of U.S.-China relations. President Biden and his administration have repeatedly said that the U.S. would defend Taiwan in the event of a Chinese invasion.

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