Director Ram Gopal Varma, who is under investigation for not paying service tax since 2012, has been accused by the proprietor of production house Lotus Allied Mediamatics for taking Rs 5 crore towards producing 'Satya 2' against a promise of 25 per cent share of the profits, but failing to return the money after the film's release.

The complaint by Dr Arun Sharma claims Verma approached him with the proposal in September last year, and an agreement was entered into by Dream Force Enterprises, Mediamatics and Mammoth Media & Entertainment. Verma also allegedly promised to open a bank account specifically for spending the Rs 5 crore as per the agreement, and to deposit movie revenue in a dedicated escrow account. The complaint further claimed Dream Force did not open an escrow account. It claimed Rs 2.5 crore was paid by cheque, and the rest was to be paid to make-up artists, camerapersons and other crew, supplied by Mediamatics, reports The Times of India.

"Verma has stopped responding to our calls and also threatened us saying he has good underworld connections," said Om Prakash Mishra, a spokesperson for Mediamatics.

Ten days ago, residents of the society where Dream Force has its office asked them to vacate after creditors began lining up. Senior PI Subash Vele of Oshiwara police station said, "We have already received the complaint and an inquiry is being conducted. I don't know anything. Ask my co-producer. I'm making a South film which requires me to be in Hyderabad. It's been a year since I'm here," Verma told Mirror on Sunday.

According to officials, Dream Force Productions Pvt Ltd and Dream Force Enterprises don't appear in any of their records, adding the Rs 1 crore Verma received as directorial fee for Satya 2 has already been spent.

Officials said Verma's claim that his production houses are registered in Hyderabad was found to be false.