Filmmaker Breaks Silence Over Tax-Credit Prison Nightmare

Michael Piazza
Daniel Adams

Daniel Adams was the first Hollywood player sent away for fraud in the billion-dollar business of location incentives. Now freed, he has set his sights on working again, lining up $12 million from investors for a gangster drama he hopes to shoot this year.

This story first appeared in the March 7 issue of The Hollywood Reporter magazine.

Near the end of 2009, Daniel Adams was desperate to finish his latest movie. But the filmmaker behind the period romance The Lightkeepers, starring Richard Dreyfuss and Blythe Danner, was running out of money well before shooting ended. Instead of shutting down production, Adams submitted fraudulent documents to score at least $4.7 million from inflated claims for Massachusetts tax credits on Lightkeepers and another film. He was caught, pleaded guilty to 10 counts related to embezzlement and, in 2012, became the first Hollywood figure to go to prison for committing tax credit fraud.

"You know the old saying among filmmakers: 'Do whatever you can to get it in the can,' " Adams, 52, tells THR in his first interview since his release in September after serving 21 months. "I took it a step too far. I broke the law, but my only goal was to get the movie in the can."

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Now Adams, whose 25-year career in low-budget movies includes giving Sandra Bullock her first starring role in 1989's A Fool and His Money, is trying to get back in the game. His plight illustrates the temptations and dangers associated with the booming business of film and television production tax incentives, by which $1.5 billion in credits are doled out annually by state and local governments. In early February, veteran producer Peter Hoffman was charged by federal prosecutors with submitting a false application for $1.1 million given to him by Louisiana to turn a dilapidated New Orleans mansion into a postproduction facility. On Feb. 21, California state Sen. Ron Calderon and his brother were indicted on charges that the lawmaker took bribes in exchange for support of a sweetened credit for independent filmmakers. Both have denied wrongdoing.

Adams' case is very much a Hollywood cautionary tale. He still must repay nearly $4.3 million he was fined by the state of Massachusetts and about $20,000 in lingering debt from movies he has made -- even as he remains on probation for another 10 years. Worse, his reputation within the film industry is in tatters. When Meryl Streep, whose daughter Mamie Gummer was cast in Lightkeepers, learned of the scheme, Adams says she called her then-agent Tony Lipp, livid: "She was very angry and said, 'What did you get my daughter into?' " Lipp, now a manager, did not respond to a request for comment.

Adams, a Massachusetts native, got his start making political commercials. After breaking into feature directing with Fool, he made a string of films including Fox's Primary Motive (1992), starring Judd Nelson and Justine Bateman, and The Mouse (1996), starring John Savage and Rip Torn. Adams bought homes in Los Angeles and Barnstable Harbor, Mass., and in meetings with potential investors he came off as wealthy (he's an avid sailor) and hinted about family money and attending Harvard (he had taken extension classes there).

The trouble for Adams started after he filed for bankruptcy protection in 2000, a result of trying and failing to build a wooden yacht. He found it difficult to get financing for his movies, so in 2007, he began submitting fraudulent tax filings.

He used the proceeds to scrape together the $5 million budget for 2008's The Golden Boys, starring David Carradine and Bruce Dern, then Lightkeepers, which cost about $1.4 million and was released in six theaters by New Films International before heading to home video.

His scheme began to unravel in March 2010, when a state auditor discovered taxes had not been withheld on salaries paid to four actors in Adams' movies, including Dreyfuss.

Adams paid the back taxes but then filed state returns in the names of three actors in an attempt to score another rebate. That led to additional probes and eventually an indictment.

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When first asked to explain the issues in 2010, Adams spilled the entire scheme, admitting his guilt against the advice of his attorney. He later was called into the Massachusetts attorney general's office for an interview. But instead of talking, he immediately was arrested, handcuffed and paraded in front of photographers. The office had a news release ready as he was led to a squad car. "I think the attorney general wanted to make an example of me," says Adams. A spokesman for Attorney General Martha Coakley declined comment. However, a source familiar with the investigation says authorities had become alarmed when Adams told them he was leaving for California to work on a movie.

In addition to support from his wife, daughter and two older children, Dreyfuss, Danner and at least 17 others penned letters to the judge on Adams' behalf before his sentencing. Danner wrote that she had assumed "that his passion for getting these two wonderful films made blurred his vision of what was right and allowed him to stumble and make these missteps."

Coakley wanted Adams sentenced to five to eight years. Instead, the judge gave him two to three years. Unable to post $1 million bail in December 2011, the filmmaker was incarcerated in the tough Suffolk County Jail in Boston. "I was in with murderers and drug dealers, bank robbers and so forth," he recalls. "I think I was the only white-collar person there."

In May 2012, Adams was moved to Walpole, a fortresslike state prison with a history of violent inmates. "I saw guys nearly beaten to death right in front of me," he recalls. "I saw horrible things."

In late-summer 2012, Adams moved a third time to a minimum-security institution, Old Colony Correctional Center in Bridgewater, which houses nonviolent criminals. Even there, he was considered the "Hollywood guy." "People got mad at me for no reason," says Adams. "One guy hit me a couple of times; it bruised my rib cage. I got over it. I didn't report it -- you don't do that in jail."

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Locked in a sweltering cell, Adams had a lot of time to think. Chronically overweight, he had an epiphany: "If I'm going to have a couple years taken away, I want to put it back on the other end. So I decided to get healthy."

In addition to losing 110 pounds by walking every chance he had, he began meditating and decided to jump-start his career. At the time of his sentencing, Adams was preparing to direct a big-screen version of the 1960s TV Western series The Big Valley for Fox, with Jessica Lange and Aidan Quinn starring. Adams had penned the script, but when he went to prison, the movie went into turnaround.

While incarcerated, Adams instead turned his attention to another script he had written. Curtain of Fire was a gangster drama set in Los Angeles and a jail in the Midwest. "I read the prison sequence and was like, 'This is nonsense,' " he recalls. "It actually had nothing to do with what was reality, I realized. So I rewrote it while I was in prison, and it's extremely authentic."

Adams hopes Curtain, with a prison sequence now set at Walpole, will be his ticket back to moviemaking. He says he has lined up individual investors who guaranteed $12 million to make the film, which he hopes to shoot in 2014. Now all he needs to find are stars who will take a chance on working with him.

"If people have it in their hearts to forgive me, I think I can make a go of it," says Adams. "If they don't, I won't. We have the money to make the movie. It's just a question of seeing who is willing to work with me and who isn't."

Given what happened last time, would Dreyfuss act in another Adams movie? "If his financing was real, locked and passed muster from my people," the star tells THR. "And I liked the script."