Production sector seeks to overcome bad deal, bribery scandal

Just as a bribery scandal is winding down after having given a black eye to Louisiana’s entertainment tax credit program, a new controversy has popped up.

The latest involves the loss of hundreds of thousands of dollars invested by New Orleans Saints football players, past and present, in Louisiana film tax incentives that turned out never to have existed.

The football players, who thought they would get $1.33 for every dollar they put up, are now feeling the financial hurt. Several, including current Saints linebacker Scott Shanle, and two former players for the team, have sued Louisiana Film Studios LLC, which was using an abandoned Winn-Dixie warehouse for filming.

However, the company recently entered Chapter 11 bankruptcy reorganization procedures, and the matter is likely heading for a long run in court.

Though he’s not named in the filing, company topper Wayne Read has said he would try to make good on the $2 million owed to all investors. He attributes the nonpayments to a shortfall in income over expenses.

The latest development in the bribery scandal took place in late August when the last of three participants was sent to prison. Mark Smith, a former top official in the state’s film office, was sentenced to two years of incarceration for accepting money to steer unnecessary tax credits to local filmmaker LIFT Prods. and its co-founder, Malcolm Petal. He in turn cashed them in for his own financial gain. Petal in 2008 was sentenced to five years in prison.

In July, local attorney and bagman William Bradley, who passed the bribes from the film executive to Smith while cutting himself in on the action, was sentenced to 10 months in federal prison.

The two situations are completely unconnected. But the coincidence in timing has raised some concerns within Louisiana’s film community that the state’s highly successful incentives program might again be besmirched. Fortunately, the good times are rolling for Louisiana’s subsidy program, and there has been little public outcry.

“We’ve moved well beyond the LIFT incident, and the people who committed the offenses are doing time,” says Chris Stelly, head of Louisiana’s film and television office. “I think the book is closed on that.”

As for the Saints situation, he points out that the state’s film commission was in no way involved, noting that “no one ever applied for any tax credits.”

To avoid future problems, the state has been combing Louisiana’s incentives program, and production company auditors are doing the same.

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