March 5, 2025
Ontario’s securities watchdog alleges that a Toronto resident who raised more than $500-million from hundreds of investors for film, television and animation productions misappropriated at least $70-million of investors’ funds, including to provide loans to a real estate developer.
The Ontario Securities Commission announced fraud allegations Tuesday against Jason Cloth, who has executive producer credits on films such as Joker and Babylon, and his now-defunct private lending company, Creative Wealth Media Finance Corp. The company, which was headquartered in Toronto, started bankruptcy proceedings in October, 2023.
According to the OSC’s application, Mr. Cloth and Creative Wealth raised more than $500-million from more than 500 investors in Canada and the United States between 2013 and 2022, promising to use those funds to finance film, television and animation projects.
Creative Wealth entered into two types of contracts with investors: participation agreements to raise funds for a specific media project, and secured loan commitment agreements for projects bundled together as a series. Borrowers were charged a percentage of the loan amount as a facilitation fee.
The OSC alleges that Mr. Cloth and Creative Wealth defrauded investors by diverting at least $70-million to purposes that had not been disclosed, including using money from new investors to repay existing investors. (An investment fraud that involves paying existing investors with funds collected from new investors is known as a Ponzi scheme.)
The securities watchdog also alleges that in some cases, the amount of funds that Creative Wealth raised for specific projects exceeded the amounts actually lent or specified in agreements. For instance, the company raised US$3.7-million for the Ben Foster flick Leave No Trace, even though the agreement stipulated that the maximum amount to be raised for that project was US$2.5-million.
In other cases, funds that investors had been promised would be used for specific projects were allegedly diverted to other projects without investors’ knowledge, according to the OSC.
Some of the investors’ funds were not used for film and television projects at all, the watchdog alleges. Between 2018 and 2021, Creative Wealth allegedly lent more than $50-million to a real estate developer for the construction of townhouses in Kingston, Ont., without any written agreements and without informing investors, according to the OSC. The majority of the loans to that developer had not been repaid as of late 2023, the OSC said.
Mr. Cloth could not be reached for comment.
None of the allegations have been proven in court.
“The Respondents’ dishonest conduct harmed investors and undermined the integrity of the capital markets. Through this proceeding, the Ontario Securities Commission seeks to hold Cloth and Creative Wealth accountable for their misconduct and remove them from Ontario’s capital markets,” the watchdog’s application reads.
The Capital Markets Tribunal will hold a case-management hearing on April 4. The tribunal is a division of the OSC that is responsible for the commission’s adjudicative function and comprises at least nine adjudicators.
Last year, a Florida jury ordered Mr. Cloth to pay approximately US$19.6-millionafter finding that he had defrauded an investor out of millions of dollars, according to media reports.
Courtesy of Globe and Mail – March 4, 2025
