Movie Investor Victims Unable to Show Middleman’s Fraud, for Now

Hollywood film investors who lost millions in what two of them describe as a Ponzi scheme failed to show the middleman who solicited their participation knew of the alleged hustle, a federal judge in Texas says.

The investors, Casey Oaks and James Mormile, cite quotes from defendant Suraj Maraboyina that they say show he knew the investment was a scam from the beginning. But those statements came after the investments were made and “could not have possibly influenced earlier investment decisions,” Judge Brantley Starr of the US District Court for the Northern District of Texas wrote.

Starr invited Oaks and ...