Controversial deal looms over Trump’s treasury secretary pick

Josh Kosman and Richard Morgan

New York Post

30th November 2016

Wall Street investor and Hollywood producer Steven Mnuchin, Donald Trump’s choice for treasury secretary, is likely to find his Senate confirmation process a bit stickier than he had hoped. One of the more controversial deals in his recent past is about to be rehashed in the courts, sources tell The Post. RKA Film Financing, which had lent $75 million to Relativity Media, one of Tinseltown’s studios and the producer of “Masterminds,” will soon file an amended complaint in Manhattan state court against Mnuchin and others, alleging it was ripped off in a 2015 financing deal.

The former Goldman Sachs executive and the others to be named in the suit were Relativity board members. RKA will claim the studio gave it false financial information, which led to it losing money on the deal, a source close to the situation said. State Supreme Court Justice Charles Ramos on Nov.

3 dismissed an earlier RKA suit over the same allegations but allowed the company to refile the allegations if they were more properly constructed. Lawyers for Mnuchin strongly denied the allegations last year when RKA first filed the claims and again in the spring. They will likely again find the claims without merit — but the lingering expected lawsuit could make Mnuchin’s Senate confirmation hearing early in 2017 a bit bumpy.

RKA’s new complaint will allege fraud as opposed to the prior allegation, the source said. . Mnuchin was an early backer of the Republican candidate.

The bespectacled former finance chairman of the Trump campaign is a clear Washington outsider. RKA alleged in its suit that in April 2015, Mnuchin, then Relativity’s played a role in giving it false assurances about the studio’s financial health. The $75 million was only to be used on print and advertising, and not general corporate expenses, RKA was told, according to the first lawsuit.

In arguing against the merits of the eventually dismissed suit earlier this year, Mnuchin’s lawyer said that since his client joined the Relativity board three months after RKA invested its $75 million, he couldn’t have defrauded the company. Soon after the RKA loan, in July 2015, Relativity, headed by Ryan Kavanaugh, filed for Chapter 11 reorganization. RKA lost millions because of the Chapter 11.

At the same time, OneWest Bank Group, where Mnuchin was chairman and chief executive, recouped its entire $50 million loan just prior to the filing. OneWest was a senior lender — RKA was not. In the suit that was dismissed, RKA sought $110 million from the defendants.

Mnuchin’s lawyer declined comment on the possibility that RKA would soon refile its suit..
 

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