Court Frees Steven Mnuchin From Relativity Media-Related Fraud Case

Steven Mnuchin
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Treasury Secretary Steven Mnuchin’s off the hook in a fraud charge tied to his tenure on the board of Relativity Media in a seven-month period leading up to its 2015 filing for Chapter 11 bankruptcy protection.

The New York State Supreme Court yesterday granted his motion to dismiss fraud charges against him by RKA Film Financing. But the court rejected Mnuchin’s motion to slap sanctions on RKA.

The bank consortium alleged in February that Mnuchin and 11 others at Relativity including CEO Ryan Kavanaugh duped RKA into lending $81 million to help finance five films. They secretly knew that the cash would be used to prop up the struggling studio’s operations before it filed for bankruptcy protection, RKA said.

The suit, seeking $110 million in damages, revived allegations RKA made at the U.S. Bankruptcy Court.

The Treasury Secretary asked the New York Supreme Court in March to let him out.

The court agreed, concluding that RKA failed to prove that Mnuchin “was responsible for, aware of, or participated in the purported fraud.”

The Treasury Secretary’s “personal friendship with Kavanaugh is insufficient to establish awareness of a liability,” it adds.

Indeed, the court says that RKA “has yet to identify a specific factual misrepresentation made by Mnuchin to RKA.”

He joined Relativity’s board in October 2014 which, the ruling notes, was “more than three months after the Funding Agreement was executed.”

Even so, Mnuchin isn’t entitled to collect costs and fees from RKA because he failed to offer “evidence of frivolous conduct.”

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