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In Louisiana, a federal trial is now underway against Seven Arts Entertainment CEO Peter Hoffman, producer of films such as Rules of Engagement and The Believer as well as an important middleman between tax breaks and film companies.
Prosecutors have charged him and partner Michael Arata with wire and mail fraud in connection with being given $1.13 million to purchase an old mansion at the edge of the French Quarter in New Orleans to be transformed into a film postproduction facility. According to the indictment, the defendants submitted false expense reports in order to deceive the state of Louisiana into issuing tax credits not earned.
Hoffman has been fighting this case for more than a year — and in allowing the prosecutor’s claims to be heard by a jury, U.S. District Judge Martin Feldman has rejected many theories why a trial shouldn’t take place, ranging from the argument that unissued tax credits aren’t property to, most recently, allegedly erroneous instruction to the grand jury about the state tax credit program and its administration.
On the latter point, a judge agreed on Friday with the government that “the grand jury was properly instructed on the applicable federal charges.”
Hoffman also wasn’t able to preclude a trial by arguing that he had clear and unambiguous notice of actions he was forbidden from doing and that the state’s tax credit law specifically approved of certain kinds of transactions. He might have made a good faith tax credit application, but that’s an issue for the jury. Since he’s being charged with a scheme to defraud, the judge notes it’ll be up to the prosecutors to prove beyond a reasonable doubt that he had specific intent.
On Tuesday, the trial began, according to court documents, and before opening statements were delivered, the judge made one important ruling in Hoffman’s favor.
Prosecutors wanted to stop Hoffman from introducing evidence that the project to transform a mansion into a postproduction facility ultimately merited more in tax credits than it received, aimed to stop the defendant from telling the jury how Louisiana treated other film and infrastructure projects, and even hoped to stop Hoffman from arguing the government had to prove that Louisiana was actually defrauded.
In turn, Hoffman’s attorney Lance Unglesby told the judge that such evidence was “directly probative of Mr. Hoffman’s intention to do no harm, material or otherwise, to LED [Louisiana Economic Development] and his consequent good faith.”
The judge agreed with Hoffman that he should be able to present this evidence. And with that, the trial opened.
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