Seven Arts Founder Suffers Setback in ‘Hollywood on the Bayou’ Tax Fraud Case

Jul 22, 2014  •  Post A Comment

The founder of Seven Arts Entertainment got bad news in his battle against tax fraud charges. Deadline.com reports that a federal judge denied a motion by Peter Hoffman to dismiss charges against him "stemming from $1.13 million he obtained in Louisiana tax credits to refurbish a run-down old New Orleans mansion and turn it into a state-of-the-art post-production facility. Hoffman declined comment until he’s had time to study the judge’s 27-page ruling. A trial is set for January 20."

Hoffman's indie film production company has produced a string of feature films including "Stander" (2004), "Asylum" (2005) and "Night of the Demons" (2010). Hoffman has insisted he did nothing wrong in the case after the U.S. Attorney's Office in Louisiana brought criminal tax fraud charges against him in February.

"The 22-count indictment accuses Hoffman, a former business partner, and Hoffman’s ex-wife, producer Susan Hoffman, of conspiring to secure $1.13 million in Louisiana tax credits without having done the work they told state officials they were going to do. All three have pleaded not guilty to the charges," TheWrap reports.

The report adds: "At the center of the case is a once-elegant three-story mansion at 807 Esplanade Avenue in the French Quarter that had been abandoned for years and had fallen into a severe state of disrepair before it was purchased by Seven Arts in 2007. After major repairs and restoration, it reopened as Esplanade Studios in July 2012. Federal prosecutors charged the Hoffmans with filing 'materially false and misleading film infrastructure tax credit applications and supporting documents' with the state of Louisiana 'that fraudulently claimed that certain expenditures had been made relative to 807 Esplanade when, in truth and in fact, the expenditures had not been made as claimed.'”

The indictment further alleges that the three “conducted circuitous bank transfers to create the appearance of payments” in connection with construction work that was not done and equipment that was not purchased, the story reports.

The Hoffmans filed a 40-page motion for dismissal, saying in part: “These tax incentives have successfully led to the development of a thriving television and motion picture industry in Louisiana, aka ‘Hollywood on the Bayou,’ which ranks behind only California and New York as a site for the production of movies and television programs."

The motion for dismissal "notes that the Hoffmans, through their company Seven Arts Pictures Louisiana (SAPLA), fulfilled the quid pro quo for seeking infrastructure tax credits under Louisiana law by making substantial investments to restore a rundown property in Louisiana and creating a production and postproduction facility that has been operating since July 2012," the story adds.

The motion argued that the state's film tax credit law is vague and unclear, stating: “It is settled that when the law is vague or highly debatable, a defendant lacks the requisite intent to violate it.”

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