(Reuters) — A California movie producer who heads a private equity firm was arrested on Wednesday on charges that he and another man defrauded investors in hedge funds overseen by a New York-based investment adviser out of $26 million, prosecutors said.

David Bergstein, chief executive of private equity firm Cyrano Group Inc. and executive producer of the 2015 film "In the Heart of the Sea," was charged in an indictment filed in federal court in Manhattan.

The indictment also charged Keith Wellner, the former general counsel of Weston Capital Asset Management, whose hedge fund investors were defrauded by the defendants, according to prosecutors.

Mr. Bergstein, 54, and Mr. Wellner, 49, were arrested at their respective residences in California and New York, an FBI spokeswoman said. Both are expected to appear in court later on Wednesday.

Lawyers for Messrs. Bergstein and Wellner did not immediately respond to requests for comment.

According to the indictment, Messrs. Bergstein and Wellner engaged in a scheme to conceal information from Weston investors about transactions involving their money, and transferred funds from one pool of Weston investors to make payments to another.

The indictment said they also misappropriated some investor funds for their own and others' benefit.

The U.S. Securities and Exchange Commission, in a related civil lawsuit filed on Wednesday, accused Mr. Bergstein of misappropriating over $5.8 million to support an "extravagant lifestyle."

According to court papers, the case related to a probe of individuals including investment banker Jason Galanis involved in market manipulation for reinsurer Gerova Financial Group Ltd.

Weston had done a deal with Gerova in 2010 that prosecutors said prompted the first of two schemes involving Messrs. Bergstein and Wellner. Mr. Galanis pleaded guilty in July to securities fraud.

Albert Hallac, Weston's founder, pleaded guilty in January to charges that he schemed to defraud Weston investors.

Mr. Bergstein had previously controlled several movie production companies including ThinkFilm and Capitol Films Development. He took an advisory role in Walt Disney Co.'s 2010 sale of Miramax to an investor group that included a business partner.

His movie credits include serving as an executive producer of 2004's "The Whole Ten Yards" and 2007's "Before the Devil Knows You're Dead."

In 2010, five of Mr. Bergstein's film companies including Capitol Films and ThinkFilm were forced into bankruptcy at the urging of a group of creditors, court records showed.