Harbinger movie money problems

John Ramos

Several weeks ago, a fellow reporter and I visited Ironbound Studios in Chisholm, Minnesota to report on The Harbinger, a movie being filmed there. Ironbound Studios was founded in 2015 by Jerry Seppala, a man who was later convicted of defrauding investors with non-existent movie projects. He is due to be sentenced in federal court on July 17. I was concerned because Seppala was still involved with Ironbound, in some capacity, but nobody would tell me what he did.

Current Ironbound President Joel McGuire did not appreciate us showing up unannounced and kicked us out, but not before I observed that real movie work was going on at the studio. They even had a real movie star: Madeleine McGraw, an up-and-coming child actor on the national stage. In addition to acting in movies, McGraw is a spokesperson for the Kia car company; at one point she had to take time off from working on The Harbinger to appear on the Jimmy Kimmel Show in Hollywood, in a Kia-related skit.

The Harbinger is the first movie to be filmed at Ironbound Studios. It is being financed by Veteran Films, a nonprofit organization that was formed in October of 2017. According to Veteran Films President Steven Reed Carver, in a conversation that I had with him on April 25, Veteran Films’ mission is to provide work on movies for military veterans, Native Americans, and battered women. He said that “about 30” people in the targeted groups were employed on The Harbinger, as well as many local Chisholm residents. He also said that he hoped to make Harbinger sequels at Ironbound in the future.

The movie was originally expected to cost $2 million, but by the time it wrapped on May 24, it had gone $500,000 over budget. On June 10, when I spoke with the movie’s director, Will Klipstine, he told me that his entire 100-plus-person crew was still waiting to be paid for their final week of work. Some people are owed two weeks’ pay. 

“So we’re, like, 400 grand in the hole right there,” Klipstine said. He told me that the cash flow problems had threatened to shut down production entirely.  “On the third-to-the-last day, the whole crew was going to walk at lunch … I got them all together and I just said, ‘I respect whatever you guys do … If you guys walk, I respect you 100 percent. I’m in full support of you. And if you don’t walk, same thing.’”

Ultimately, the crew agreed to stay on when Katie Anderson, the movie’s primary investor, promised them that she would raise the additional money. Anderson, a Native American woman from the Twin Cities, had already put up the initial $2 million. She came to the set of The Harbinger and, in the presence of the department heads, signed a document saying that she would cover the cost overruns. This was sufficient to keep everybody working through to the end.

To raise the money, Anderson proposed to sell a house. The deal was scheduled to close on June 2, and the cast and crew were told that they would get their money then. Unfortunately, the deal did not close as planned. On June 3, Steven Carver emailed the cast and crew: “There was a delay in the closing on the house, so do not deposit or cash your checks. The house closing is being rescheduled and [Production Manager] Kristin [Wagner] is assisting with that as she has a background in that industry … It will not be much longer.”

An ugly past

A bit of research reveals that Kristin Wagner certainly does have a background in the real estate industry. In 2016, she was fined $130,000 and had her mortgage lender’s license permanently revoked for engaging in “fraudulent practices” and “receiv[ing] monetary kickbacks” from certain real estate loans that she had originated in 2007 and 2008.

At the time of her misdeeds, Wagner had been working with Steven Carver, who was involved in real estate before he entered the movie business. Carver had his own real estate license taken away in 2012 for “fraudulent, deceptive or dishonest practices with respect to obtaining mortgage loans for residential properties” and “breach[ing] fiduciary duties that he had toward clients.”

Carver’s scheme was to offer seminars to prospective, inexperienced real estate investors, promising to find them undervalued rental properties that they could buy for “no money down” and which would produce a small but steady stream of income over time. In his pitch, he wrote: “Carver & Associates have a streamlined system to put investors into rental investment properties that [produce] cash flow. They do all the work ahead of time to save the clients time, money, and to help avoid the classic mistakes of rental investments.” When the clients agreed to buy, Carver also arranged the financing.

Reading through the report issued by the Minnesota Office of Administrative Hearings, I was astonished to see just how badly Carver had cheated his clients. He freely exaggerated certain details and omitted others in order to portray the picture he wanted his victims to see. Among many other egregious examples, he neglected to factor maintenance costs into his “streamlined system.” He also falsified paperwork, misrepresented information, secretly changed documents (at one point, he added $7,000 to the purchase price of a property without telling either the buyer or the seller), fraudulently inflated appraisals, claimed to have licenses he did not have, and paid himself fat, illegal commissions whenever possible.

Inevitably, Carver’s clients were unable to make the mortgage payments on their properties, which fell into foreclosure. The OAH report focuses on three of Carver’s clients, who lost a combined total of 19 properties which Carver had convinced them to buy. The three clients went bankrupt within a few years, for a combined loss of $3.26 million to their lenders. Carver, on the other hand, took home $181,157 in commissions and fees.

Carver also lied to state investigators looking into complaints about his real estate practice. Once, after agreeing to meet with them, he left a voicemail canceling the meeting, saying that he had “already departed for a multi-year ocean voyage.” The report continued: “He likewise told investigators that he had not lived at [a house that he owned] in Minnetonka for two years. At the time set for his meeting … investigators found Mr. Carver at his Minnetonka home, cleaning his swimming pool.” 

In his written summation, Administrative Law Judge Eric Lipman wrote:

This case makes clear how one lie, which spirals into twenty, can be very costly. Mr. Carver’s deceptions were costly to his career, to the clients who trusted him and to the lenders who relied upon his work. To win real estate clients, Carver lied; to make money, he altered documents; to obtain licenses, he dissembled; to evade accountability for his actions, he denied meaningful roles in his business enterprises; and when pursued, he conjured up tales of floods and clipper ships that carried the details of his misconduct away. Every time that Mr. Carver was in a tight spot professionally, he marked it with a lie.

Klipstine steps up

As I spoke with various people connected with The Harbinger (most of whom requested anonymity), it became apparent that Will Klipstine stood to lose more than anyone except, perhaps, the investor. When I first spoke with Klipstine, on March 30, he focused on the creative side of the project and referred all financial questions to the “money people”—primarily Steven Carver. But when I spoke with Klipstine again on June 10, he informed me that both Carver and Kristin Wagner had been diagnosed with serious health problems “brought on by stress,” from which they were recuperating. As such, Klipstine had stepped up to take over the financial side of the production as well.

When the movie went over budget “the first time,” Klipstine said, he had taken out a personal $45,000 loan to keep things rolling. “I’m making monthly payments on that loan. And I don’t get any money until anyone else gets any money. I’ll be lucky if I see a dime, because this movie would have to sell for me to make money off of it.”

Many states have government rebate programs in place to encourage moviemaking. In Minnesota, the program is known as Snowbate. The Harbinger is eligible to receive up to 25 percent of expenses back from Snowbate. When I spoke with Minnesota Film and TV Board Executive Director Melodie Bahan, who oversees the Snowbate program, she told me that The Harbinger’s paperwork was in order, and they were certified to receive $490,000 in rebates once the Film Board verified that the project was complete and that $1.9 million (the original application amount) had been spent in Minnesota.

The problem is that the project is not considered complete until everybody is paid. Thus, when the investor’s house failed to sell as promised, Klipstine began looking around for a $500,000 loan to pay off the crew. That is where we are today. Klipstine intends to borrow the loan against the expected Snowbate money, pay off the crew, get the Snowbate money, and use that money to pay off the loan. It’s a financing merry-go-round (Klipstine called it a “Catch-22”) that adds more costs and fees to the production, but it has to be done. Klipstine said he was optimistic that he had a lender who would give him the money. If the loan is approved, it will still be another “four to six weeks” before the money is released, which isn’t exactly great news for those who need the money, but it does suggest that there is an end in sight.

Klipstine has repeatedly assured the crew, in person and via email, that getting them paid is his top priority, and that nothing will move forward until they are paid. “I know that the crew is upset, and rightfully so,” he told me. “I’m the director of this movie, and I’ve got a reputation to save … What’s right is right.” 

Klipstine said that he had only told a few people about the $45,000 loan that he took out initially, but “if it becomes like a Frankenstein situation, where it’s a whole village with a bunch of torches [coming after me], I will tell them … I’m in the same boat as [them].” (Of course, with the publication of this article, everybody will know soon enough.)

I asked Klipstine why he was putting himself on the line with the loans, rather than Carver, Wagner or Anderson. However certain the Snowbate money may be, the loans still put Klipstine in a position that could be extremely damaging if everything doesn’t work out as planned. Even if Carver and Wagner have put their fraudulent days behind, the mere existence of that fraud calls for a higher level of vigilance—especially when they’re making promises that have yet to come true.

Klipstine said that he was aware of the past, but that he had seen “nothing unethical” in his dealings with Carver and Wagner. He said they were hard workers who were committed to the movie.

“Don’t let me give you the impression that they’re sitting on their ass doing nothing,” Klipstine said. “I think Kristin is one of the best workers I’ve ever seen. Her work ethic is unparalleled … I’m going to be proactive … I’m taking it upon myself to do this, because I know Steve’s medical condition ... I’m going to do everything I can to come through, because I’ve got a hundred and some people waiting [to be paid] … And let’s be fair to the investor: She paid the [$2 million] she said she was going to pay for this movie. This is what we went over budget on, and she’s doing what she can to cover the over-budget amount … And that’s why I’m trying to get the loan, because I know she’s doing her damnedest. [But] what happens if [the house sale doesn’t raise] enough? I have to be prepared for that. So that’s why I’m talking to lenders … I’ve already made a movie, so I’m in a position where I have to deal with what I’m dealing with.”

All in all, I came away from our conversation with the feeling that Will was dealing with a level of stress and risk that I, personally, would not handle well. I appreciated his willingness to talk to me. The details of what he told me checked out, so I saw him as honest to that extent. Of course, in this cruel world, it is often the honest guys who turn into fall guys. I hope Mr. Klipstine is spared that fate. I would be perfectly happy to not write another word about The Harbinger until I watch it on Netflix and report back to my readers on whether it’s any good.