Film producer Elie Samaha says he was blackmailed into carrying out the budget-padding scheme that ultimately cost Intertainment Licensing more than $100 million.

LOS ANGELES (Hollywood Reporter)--Film producer Elie Samaha says he was blackmailed into carrying out the budget-padding scheme that ultimately cost Intertainment Licensing more than $100 million.

Samaha, who is being sued for allegedly inflating budgets for the benefit of his Franchise Pictures, says Intertainment CEO Barry Baeres threatened to withhold financing on "Battlefield Earth" if Samaha didn't sign a $500 million first-look distribution deal with Intertainment.

Samaha says the decision was tough because he and his wife had invested heavily in the sci-fi action picture starring John Travolta and did not want to see the project fail.

"You don't sign this, you don't get a (letter of credit) on 'Battlefield Earth,' " Samaha says Baeres told him. "He also told me: 'I promise you I will buy your company.' "

Baeres sat in the front row of the Santa Ana, Calif., courtroom as Samaha testified April 28 for in Intertainment's fraud, conspiracy and breach-of-contract jury trial.

Samaha's claims came a day after he insisted that he was pressured into inflating the budget on such films as "The Pledge" and "Get Carter" because Baeres was desperate to get star-driven features and was willing to do whatever it took to guarantee financing.

The two companies signed a distribution agreement at the Cannes festival in 1999; the following month, Baeres put $23.5 million into "Battlefield Earth."

Intertainment agreed to fund 47% of the budgets in return for distribution rights, but the German production-licensing group claims that it later found it was paying at least 60% of the budgets because of deferments and false costs.

The cornerstone of Samaha's defense is that he and Baeres secretly agreed to inflate the budgets. But that Intertainment denies that claim, and there are no records supporting the contention.

Samaha says his advisers warned him not to do the Intertainment deal even though it would provide critical funding for Franchise's slate of pictures. Intertainment stood to benefit because Franchise could make star-driven features cheaper than the major studios, Samaha says.

Initially, Samaha says the only benefit to him was getting "Battlefield Earth" made. Despite his misgivings about allegedly being blackmailed, Samaha says he made no written record of it or the reported oral agreement with Baeres to inflate budgets.

Intertainment attorney Scott Edelmanis attempting to prove that Franchise regularly inflated budgets because correspondence indicates that those figures were passed along as accurate, direct production costs to firms other than Intertainment, including Warner Bros. and several foreign distributors.

"We were rushing--we were doing 15 movies a year, (and) things we're flying out of the office," Samaha says. "We weren't monitoring things."