EFFINGHAM CO., GA (WTOC) - Sources have confirmed that federal authorities are investigating the production company that bailed out of a multi-million dollar movie studio in Effingham County.
Medient Studios, which later became Moon River Studios, is being investigated by the IRS and U.S. Securities and Exchange Commission. In a WTOC investigation, we uncovered questionable business deals and lawsuits that go back years.
Many people in the Savannah area say they were not surprised when the plans fell through, because they said it was "all too good to be true." But, was this just a failed business plan, or was this "the plan" all along?
"It was a grandiose scheme to begin with," said John Henry, CEO of the Effingham County Industrial Development Authority.
The Effingham County IDA is taking a loss after three years of failed promises to create a private/public partnership with Moon River Studios. The county invested more than $200,000 or taxpayer money to help build the nation's largest movie studios, which would have created more than 1,200 jobs.
But the county isn't the only one recovering from a loss.
"They are having to pick up the pieces like anyone else would," said attorney Charles Bowen.
Bowen represents at least a half dozen former Moon River employees who say they've lost thousands because they never got paid.
"Certainly, a lot of money has been invested, and a lot of money has been paid in. What exactly happened to it, I don't know," said Bowen.
According to 2015 investment filings with the U.S. Securities and Exchange Commission, Moon River lost $6 million and only made $18,000. County officials said there's nothing to show for it.
The company didn't have to file for bankruptcy, so where did the money go?
Well, that's the million dollar question, and I've spent hours sorting through their records with the U.S Securities and Exchange Commission.
Those records reveal countless transactions of stock and securities. Filings also indicate those who did get paid were often compensated in shares instead of cash.
But sources said the company was also selling more stock than they really had, driving the stock's price down to two hundredths of a penny.
When another company bought Moon River in 2015, they only bought the assets, not the liabilities. Bowen is now representing at least a half a dozen former employees who say they've lost thousands.
"They very specifically state that every time they change their name, we are buying this asset, we are buying the equipment, we are buying the rights to different stories, but we are not purchasing any of the previous debts or liabilities of the company, so then that original company just goes out of business," Bowen said. "So it makes it extremely difficult for someone that is sitting there with a contract with company A to then try to collect anything from Company B that's taken over because that non-existent defunct company now owes you."
WTOC: "Do you think there was anything illegal going on?"
Henry: "I'm not going to comment on that."
Back in 2014, when the company was still operating as Medient Studios, the SEC suspended trading for 10 days because of "questions about the accuracy and adequacy of publicly disseminated information."
"I don't think that selling penny stocks is considered the most high profile portion of the investment game. That alone is a red flag," said Bowen.
Were there any other red flags? The former CEO of Moon River Studios, Jake Shapiro, had very little experience in the film industry. In fact, the beginning of his career is tied to a blockbuster hit.
WTOC sat down with Shapiro in 2015.
"I started off on Wall Street," he said. "I was there in a very interesting time in history for those of you who have seen The Wolf of Wall Street," said Shapiro. "We never tossed the midget against the Velcro wall. We did it for distance."
"In my own research investigating this company, there's been very little evidence that any legitimate business activities were truly going on," said Bowen.
Shapiro has refused to comment on this investigation.
To see the entire behind-the-scenes investigation of Moon River Studios - dating back to when it was Medient Studios, watch WTOC Prime: Moon River Runs Dry Wednesday night at 7:30 p.m.