Mallick Ordered to Pay $12M in Breach-of-Contract Suit
LOS ANGELES — Chris Mallick, the former operator of online processor ePassporte who later produced Hollywood films, has been ordered to pay $12 million for failing to uphold his settlement with Fire Glow Holding Inc., which alleged he lied about his net worth to obtain a loan to finance films.
Greg Elias, the managing director of Fire Glow Holding, alleged in the case that Mallick lied about the purpose of a $15 million loan and the value of his own holdings, including ePassporte, before squandering the funds on a botched film project, according to a report on Law360.
That mainstream project was "Middle Men," the story of the rise to fortune through the creation of an online payments processing company. The film, with a budget of $20 million, was released in the U.S. in August 2010 and garnered $750,000 at the box office.
On Friday, Los Angeles Superior Court Judge Maureen Duffy-Lewis granted a motion by Fire Glow that "entered the consent judgment requiring Mallick to pay ... $12 million," according to Law360.
“Mallick's representations regarding his net worth, the purpose of the loan, the value of ePassporte and the proposed sale thereof were false when made, and were made with the intent to deceive Fire Glow and induce it to make the loan,” the original complaint said.
Mallick solicited the loan from Elias, the suit said, claiming that he needed the money to pay off a divorce settlement with his ex-wife.
Mallick said he would give Elias a cut of ePassporte's cash flow while the loan remained outstanding, and that the potential sale of the company would cover Mallick's debt, according to allegations.
Mallick, at the time, said that the processor had been valued by a potential buyer at $80 million. But in September 2010, Visa Inc. had severed its relationship with ePassporte, with the company dissolving the next month.
Elias later learned that Mallick had actually settled his divorce for $6.1 million, according to the complaint.
“Mallick used the loan proceeds or most of them for purposes other than the [divorce settlement] including investments in risky movie productions, and had the intent to do so at the time he negotiated the loan,” the complaint said.
Mallick did make a partial payment of $3 million to Fire Glow in August 2008, but he has indicated he would be unable to pay the remaining balance, according to the suit.
“As a direct and proximate cause of Mallick's false representations, Fire Glow now holds a worthless loan with a balance due of $12 million from an obliger who claims to have no ability to repay the loan,” the complaint said.