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Chris Mallick's Studio Sues Paramount Pictures for $7M

Chris Mallick's Studio Sues Paramount Pictures for $7M
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Sep 8, 2016 10:38 AM PDT    Text size: 

LOS ANGELES — Mainstream movie studio Middle Pictures, which is operated by Chris Mallick, the former operator of now-defunct adult processor ePassporte, has filed a $7 million lawsuit against Paramount Pictures.

Middle Pictures’ suit, filed yesterday at Los Angeles Superior Court, alleges Paramount breached an agreement to properly promote and distribute "Middle Men," and instead used it as part of a library of films to sell to services like Netflix.

"Middle Men" is the story of the evolution of online payment processing services and the birth of online porn. Mallick produced the movie, which starred Luke Wilson, Giovanni Ribisi and James Caan.

The suit claims that Paramount failed to pay or account for profits from "Middle Men" in deals with Netflix and Epix, which allegedly made Paramount millions.

In the suit, Middle Pictures said it has seen little of the money, and has asked for an accounting for how Paramount promoted, or failed to promote, the movie.

Middle Pictures said that the movie cost $21.5 million to produce, and it paid Paramount an additional $6.8 million to promote its release. The movie, however, earned less than $1 million at the domestic box office.

According to Middle Pictures' suit, Paramount limited the movie’s release to just a few number of screens. The distribution was part of Paramount’s “broader strategy to freely acquire valuable content that it could later use to create packaged libraries for sale to video-on-demand and streaming services such as Netflix, Hulu and Amazon Prime,” the suit alleges.

The Middle Pictures claim, which seeks at least $7 million in damages, alleges breach of contract, fraudulent inducement and accounting.

Prior to mainstream movie production, Mallick operated ePassporte, which he founded in 2002 after a stint at Paycom.

But the company started to unravel in September 2010 after its host bank, St. Kitts-Nevis-Anguilla National Bank Ltd., said the processor had “certain deficiencies.”

A month later, ePassporte dissolved after Visa Inc. severed its prepaid card program.

The end of ePassporte meant that scores of adult companies would go unpaid after Mallick disappeared from the radars of business partners.

In 2014, Mallick was 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 "Middle Men."

Fire Glow alleged in that case that Mallick lied about the purpose of a $15 million loan and the value of his own holdings, including ePassporte, before using the funds for "Middle Men."

According to allegations in the 2014 suit, Mallick said he would give Fire Glow a cut of ePassporte's cash flow while the loan remained outstanding and that a potential sale of the company would cover Mallick' s debt.

Mallick, at the time, said that ePassporte had been valued by a potential buyer at $80 million.

“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 original 2014 complaint said.

Pictured: Chris Mallick

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