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Peter Hoffman Convicted on Tax Credit Fraud in Louisiana

A federal jury in New Orleans has found producer-attorney Peter Hoffman and producer-actor Michael Arata guilty of defrauding a state tax credit program of $1.1 million.

Hoffman, his wife, Susan, and Arata were found guilty Monday of conspiracy to wire fraud in connection with the rehabilitation of a 155-year-old mansion that they converted into a film post-production studio that was used for HBO’s “True Detective” series. Peter Hoffman was also convicted on 21 counts of mail and wire fraud related to the deal.

Arata, the husband of New Orleans Deputy Mayor Emily Arata, was convicted on seven counts of wire fraud and four counts of making false statements to FBI agents. Susan Hoffman was acquitted on all counts except for the single count of mail fraud.

In an indictment made public in February 2014, federal prosecutors claimed Peter Hoffman and Michael Arata submitted “materially false and misleading documents” in expenditures on the mansion to state auditors in 2009 in order to receive the credits, when in fact the expenditures had not been made.  Prosecutors alleged the pair submitted false documents showing spending on film equipment and construction work and engaged in “circuitous bank transfers” to make it look as if payments were made.

The producers had applied for the credits through Hoffman’s Seven Arts Entertainment and Arata’s Leap Film Funds II. Louisiana has one of the nation’s most generous incentive programs.

U.S. Attorney Kenneth Allen Polite said in a statement, “Those who brazenly steal from the taxpayers and abuse tax credit programs should know that we will relentlessly pursue and hold them criminally accountable wherever possible. Just as important, today’s verdict underscores the fact that wherever we find criminal conduct, as we did in the case of the Hoffmans and Michael Arata, we will follow the facts and bring justice to those individuals, regardless of where they live, their wealth or their last names.”

Jurors deliberated over two days, after hearing two weeks of trial testimony. In court, both Arata and Hoffman defended the transactions as legal.

The studio opened in 2012 and was used for movie, TV and commercial projects.

Hoffman is best known in Hollywood as president and CEO of Carolco Pictures during the late 1980s and early 1990s when the studio used offshore financing to fund such projects as “Total Recall,” “The Doors” and “Terminator 2: Judgment Day.”

Following an IRS investigation into Carolco’s finances, Hoffman settled a tax fraud case in 1997 by agreeing to pay a $5,000 fine and plead guilty to one misdemeanor charge of making a false tax return.

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