“El Cantante” told the story of Hector Lavoe, a Puerto Rican salsa star who spiraled into drug addiction and died of AIDS complications in 1993. Released in 2006, and starring then-newlyweds Marc Anthony and Jennifer Lopez, the independent film flopped at the box office, grossing just $7.5 million.
But the production’s troubles did not end there. In fact, they did not end until Monday morning, when the film’s producer, Julio Caro, was sentenced to 18 months in federal prison.
As laid out in court pleadings, Caro found himself unable to support his Hollywood lifestyle after the failure of the film. He was living in a $1.5 million house in Santa Monica, on which he paid a $12,000 monthly mortgage. He paid $17,000 a year to lease a car and $45,000 to send his two children to private school. In the wake of the film’s flop, he found himself unable to admit to his wife and children that he had to cut expenses.
“I can only say that I was blind to the reality of my situation and I was too cowardly to confront my own shortcomings and inform my wife of the financial crisis we were in,” Caro told the court. “Essentially, I lived a fantasy and was looking for any opportunity to finance that lifestyle.”
Caro worked to try to “save” the film by closing overseas distribution and home video deals. His company was bringing in no revenue, and he racked up $40,000 in credit card debt financing his business operations. He nearly faced foreclosure twice in 2008 and 2009, according to court filings.
While he was struggling to make ends meet, Caro started receiving significant royalty checks from Warner Bros. for “Homie Spumoni.” The checks should have gone to the joint partnership with Burkle’s Yucaipa Corporate Initiatives Fund, but due to an error they went directly to Caro. Instead of turning the money over to Yucaipa, Caro used the money to pay his mortgage and other living expenses.
He also invested a substantial portion of the money in a “hedge fund” which promised extraordinary returns. The fund turned out to be a scam, according to Caro’s court pleadings.
When the embezzlement was first flagged in 2012, Caro concealed the theft. He panicked and lied, his lawyers stated. But in November 2014, he fully confessed to Yucaipa. He handed over reams of invoices showing that he had defrauded the investor, and even agreed to be interviewed by the FBI without a lawyer present. He ultimately reached an agreement to repay Yucaipa from revenues of TV and film projects.
In his statement to the court, Caro related how he sat his children down on the sofa and confessed to them in June, shortly before entering his plea.
“The air in the room was gone; my heart was beating loudly in my ears; and I could see both kids struggling to understand,” he wrote. “I described the crime. I told them I was to be arrested and that I was pleading guilty. I gave them full detail. I needed them to be fully informed. I told them that I was deeply, deeply sorry; they too were victims. Never did I pause before making the mistake and contemplate that they too would be victims.”
The embezzlement ended up ending Caro’s marriage. He sold the Santa Monica house and moved to a smaller rented home in Woodland Hills. His son now attends public school.
His lawyers urged Judge George King to sentence him to probation. In light of the large dollar amount involved, the prosecution sought an 18-month sentence — though it acknowledged that Caro had made an extraordinary showing of remorse and responsibility.
King sided with the prosecutors, sentencing Caro to 18 months.
“This defendant stole nearly $1.5 million from a trusted business partner,” U.S. Attorney Eileen Decker said in a prepared statement. “He then furthered his criminal activity by moving the money across the country, making it more difficult for the partner to recoup its losses.”
In his statement to the court, Caro explained the crime as the result of “an irrational attachment to the success of ‘El Cantante.'”
“Essentially, I used my perceived value of the film in the marketplace as a justification for our lifestyle,” he wrote. “Surely the film’s presence would bring me fortune and opportunity and I would be able to turn things around… I am ashamed that I became that person. I used to always say to myself earlier in my career, ‘Don’t believe the s— you shovel.’ In the end, I believed the exaggerations that are pervasive in our industry.”