Film Closings’ Response to Chicago Tribune & Screen

Film Closings was featured this week in a Chicago Tribune article as well as in Screen juxtaposing what others in the state were saying and rallying for when it came to the IL film incentive. This pos...

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25 Million in Fraudulent Tax Credits

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by Jeff Steele

Iowa Attorney GeneralThe Film Tax Credit Lawblog has two good synopses (here and here) on the status of the long awaited, much anticipated, official Iowa Auditor’s Report that is currently being reviewed by the Iowa State Attorney General.  The audit covers the film tax credit fraud cases that literally brought the State’s very successful tax credit program to a grinding halt. 

The audit found approximately $25 million in improper tax credits issued for 22 films.  $15 million of which were for improper spending and $10 million of which were for improper investing.

In addition numerous tax credit investors who made loans against those credits are still fighting to get their money (or credits) back.

Criminal charges are currently being filed against Wendy Weiner, Matthias Saunders, Tom Wheeler, and Zach LeBeau — with more defendants to come.

Copyright 2010-2012. Film Closings Inc. All right reserved.

  • Matt

    That coupled with the Michigan report it has not been a good week for tax incentives. Do you think tax incentives are economically viable for the states in the long run?

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  • Scott Hillman

    When working on a budget for a movie to be shot in new mexico-been looking at the program and its amazing how many ways it occured to me you could game the system. Not that i am doing this mind you(i am just jazzed about the money) but it occured to me.

    However after working in tax law for awhile, the bottom line is-it is extrodinarily easy to what amounts to steal from the goverment. Goverment programs to help people are easy to quirk, from nonproffit corporations that aren’t actually non proffit, to any number of obscure tax deals(my favorite-the 12 dollar incentive for buying wheat straw-which you can buy and sell over and over agian), or just straight lying on your taxes. One simply has to be be midly intelegent and have no ethics.

    The bottom line is that there is nothing really unique here to the film credit. If the state wants to get ride of a program becuse sometimes it is corupt and unclean..then they whould have to get ride of there entire goverment.

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  • http://theincentivesoffice.com Jeff Begun

    Shawn,

    Looks like you don’t come to the incentives panels we hold every 3 months. A year before the Iowa implosion, we cautioned producers to be very wary of the Iowa program. Two months before the program collapsed, we called Tom Wheeler, the commissioner, and told him that if he didn’t limit his approvals for work done out-of-state, once a legislator or reporter realized what was happening, the program would soon be shut down.

    Tom said he was on top of it — he was doing in a year what Louisiana did in four years. (Louisiana once based the incentive on total budget, and allowed some services to be outsourced).

    None of our consulting clients were hurt; we had convinced them to go to Michigan or Louisiana instead of setting up in Iowa.

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  • http://NOMPCo.com Stan Gill

    No biggie here. If these people turn out to have criminally scammed the system, hopefully, they’ll have long jail sentences to reflect upon.

    All the players in the ‘original’ tax incentives racket in Louisiana are behind bars doing substantial time.

    The ‘original’ tax incentives were setup by crooks and taken advantage of by the same crooks.

    Now that Louisiana has had, let’s say a ‘watershed’ moment, the program is flying with new rules which I say are quite fair and are great for the state.

    There’s only one crook left to sentence in Jan. 2011.

    With regards to the last scam, what is just depressing, is if any of the duped investors, some New Orleans Saints members, gave me 5 minutes, I would’ve told them it was a scam they were investing in with this admitted felon (see Wayne Read Louisiana Film Studios LLC).

    What I even find more amazing is apparently no due diligence was done by the investors to determine if the investment in LFS, LLC was viable.

    Now, a stink is left hovering over the program. Only time will flush this out with the current program successes.

    These investors are out their money and the chances at recovery on any level are slim to none. And slim has left town.

    If the people filed against in Iowa listed above are guilty, I hope the court throws the book at them.

    Funny. The exact same M.O. reported in the Iowa scam was used in Louisiana.

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