White-Collar Crime

Actor and Hollywood producer, both lawyers, indicted over tax credits for film house rehab

A Hollywood producer and entertainment lawyer and a Tulane University Law School graduate who is also an actor and producer have been federally indicted, accused of submitting fraudulent documentation to obtain Louisiana tax credits under a program that is intended to encourage the film industry in the state.

Peter M. Hoffman, a Los Angeles entertainment lawyer and producer, and Michael P. Arata, a New Orleans lawyer, actor and production company operator, face conspiracy and wire fraud charges concerning their rehabilitation of a historic New Orleans mansion in which movie editors reside while doing post-production work after filming, reports the New Orleans Times-Picayune in a lengthy article today.

Until the indictment last month, Hoffman was chief executive officer of Seven Arts Entertainment Inc.,an independent movie company he founded whose stock is traded over the counter. He has produced major movies, as president of the now-shuttered Carolco Pictures, which was behind Total Recall and Terminator 2: Judgment Day before it went bankrupt. Arata has taught continuing legal education courses on film industry tax credits for the New Orleans Bar Association.

Hoffman and his company, which is now run by his daughter, say the rehab of the Whann-Bohn house, on which the newspaper was told by developers $13 million had been spent, was legitimate and “Seven Arts Pictures Louisiana did everything with respect to the building that it promised to do,” the Times-Picayune reports. Likewise, auditors OK’d the expenditures at 807 Esplanade Ave. on which the tax credits were based before the state approved them, according to Seven Arts. Because it is common for multiple companies to be involved in movie productions, audits are commonplace.

“While the U.S. attorney seems to assert that the building is not in use as a residential and post-production facility, it has, as previously announced, been open and operating as such since July 2012,” the company said in its written statement. “Several theatrical motion picture and television productions have enjoyed doing production work at the property with many more scheduled for 2014.”

However, the indictment (PDF) contends that the two men were involved in a web of deceit involving faked documentation and “circuitous bank transfers” intended to make it appear that money was being spent on the rehab and film equipment when, in fact, it wasn’t, according to Variety.

At issue in the case is some $2 million in tax credits which were approved but not paid by the state. Another $1.13 million in credits were paid and, as the program allows, were sold to others.

Arata, through his counsel, declined to comment when contacted by the Times-Picayune. His attorney, Billy Gibbons, told the New Orleans Advocate last month that his client was surprised and disappointed by the indictment. “Michael Arata has done nothing wrong, and we will respond in court at the appropriate time,” said Gibbons in a written statement provided to the newspaper.

The Hollywood Reporter’s Hollywood Esq. blog and an FBI press release about the indictment provide further details about the case.

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