U.S. arrests head of Cyrano Group on fraud charges

A California movie producer
David Bergstein,who heads a private equity firm
was arrested on Wednesday on charges that he
and another mandefrauded investors in hedge
funds overseen by a New York-based investment
adviser out of $26 million, prosecutors said.
David Bergstein, chief executive of private equity
firm Cyrano Group Inc and who was executive
producer of the 2015 film “In the Heart of the Sea,”
was charged in an indictment filed in federal court
in Manhattan.
The indictment also charged Keith Wellner, the
former general counsel of Weston Capital Asset
Management, whose hedge fund investors were
defrauded by the defendants, according to
prosecutors.
Bergstein, 54, and Wellner, 49, were arrested at
their respective residences in California and New
York, a spokeswoman for the Federal Bureau of
investigation said. Both are expected to appear in
court later on Wednesday.
Lawyers for Bergstein and Wellner did not
immediately respond to requests for comment.
According to the indictment, Bergstein and
Wellner engaged in a scheme to conceal
information from Weston investors about
transactions involving their money, and
transferred funds from one pool of Weston
investors to make payments to another.
The indictment said they also misappropriated
some investor funds for their own and others’
benefit.
The U.S. Securities and Exchange Commission, in
a related civil lawsuit filed on Wednesday, accused
Bergstein of misappropriating over $5.8 million to
support an “extravagant lifestyle.”
According to court papers, the case related to a
probe of individuals including investment banker
Jason Galanis involved in market manipulation for
reinsurer Gerova Financial Group Ltd.
Weston had done a deal with Gerova in 2010 that
prosecutors said prompted the first of two
schemes involving Bergstein and Wellner. Galanis
pleaded guilty in July to securities fraud.
Albert Hallac, Weston’s founder, pleaded guilty in
January to charges that he schemed to defraud
Weston investors.
Bergstein had Previously controlled several movie
production companies including ThinkFilm and
Capitol Films Development. He took an advisory
role in Walt Disney Co’s 2010 sale of Miramax to
an investor group that included a business
partner.
His movie credits include serving as an executive
producer of 2004’s “The Whole Ten Yards” and
2007’s “Before the Devil Knows You’re Dead.”
In 2010, five of Bergstein’s film companies
including Capitol Films and ThinkFilm were forced
into bankruptcy at the urging of a group of
creditors, court records showed.