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Because of Vital Pictures Vital Pictures originates out swinging against a fraud suit filed Tuesday having a financing entity that backed a string of high-profile movies but punished proclaiming the studio underreported vast amounts in revenue in fraudulent accounting claims. Melrose 2, the NY-based entity that agreed in 2006 to back a slate of significant films in exchange for of a 25 percent share of revenue, argues in the suit filed Tuesday the studio has in an exercise of "under-verifying the revenue and overreporting the expenseInch because of 29 films co-funded by Melrose, including such hists as Jason Bourne 3, Rotor rotor blades of Glory as well as the Transformers series. "In contrast, five years after [the co-financing agreement] was signed, Melrose 2 has still not seen One Dollar of earn money from its $375 million investment" no matter the flicks getting into $7 billion in revenue, states the complaint, filed in Los Angeels Superior Court. But Vital responds in the statement released Tuesday mid-day the studio has carried out fair having its financial partner: "Vital has complied having its obligations to Melrose 2 and contains been forthcoming inside the audit process. We are disappointed these sophisticated traders would choose to file a suit filled with hyperbole that ignores the actual particulars rather than due to the fact process through to completion. The Melrose 2 traders have formerly received almost 90% from the investment back beneath the financing agreement, and most of the films through which they participate (such as the effective Transformers 3) remain in the very first stages from the producing potential. "Ultimately intend to intensely defend this suit, the versions involving the parties' positions are relatively modest in amount which we're confident they might be resolved inside the regular course." The suit claims potentially vast amounts in damages and argues that Vital has frequently tried to hinder the audit process on specific films, additionally to charge improper expenses against its profit participation obligations. There's lots of press coverage in the Melrose deal together with other mega-budget "slate" financing plans in 2006 and 2007. Wall Street money was flowing freely into Hollywood, and art galleries were pleased to accept cash in exchange for back-finish participations later on. Then, when the economy crashed and hedge funds together with other financing organizations shied from movie possibilities, speculation came into being about whether traders can make back their funds round the Hollywood deals. Melrose traders believe they've been cheated. Vital states it's complied while using deal. It'll be interesting to find out how this case calculates. The suit alleges causes of action for breach of contract, breach in the covenant of fine belief and fair dealing, fraud, unfair competition and declaratory relief. See the full complaint here. Email: Matthew.Belloni@thr.com Twitter: @THRMattBelloni Vital Pictures