“If it looks too good to be true, it probably is.”
Wise old saying
Yesterday, I mentioned the danger of financing your feature film using personal credit cards. (The Angry Filmmaker & Four Eyed Monsters.) If your film doesn’t sell, it’s a risk that could leave you broke at best and heavily in debt (or bankrupt) at worst. But there is even a more dangerous way to finance your film—commiting fraud. An audit was released earlier this week here in Iowa that stated that 80% of the Iowa film tax credits were flawed.
You don’t have to read all of the 277 page report (or even agree with some of its findings) to see there were a gross abuses of tax payers money. Auditor of State David S. Vaudt released a special investigation that “identified $25,576,300.50 of tax credit certificates which were improperly issued for the 22 projects.” (If you got lost in the commas, that’s more than 25 million dollars.)
The Des Moines Register article by Lee Rood stated, “Following release of the audit, Attorney General Tom Miller announced he had filed a new civil lawsuit in Polk County against five business partners and four companies involved in producing or pursuing 15 movie projects.”
The layers of fraud appear to be deep and quite commonplace. (And consistent with rumors that began kicking around the Iowa production community in ’08.) And for a dramatic twist, in the report there is a letter of concern from an Minnesota resident who wrote a letter in June of ’09 to the Iowa Film Commission stating, “I am writing because I discovered what I think to be fraud perpetrated on the tax payers of Iowa.” He goes on to detail how the head of a production company in L.A. told him (in his words), “She puts in millions of dollars in phony deferments with people she knows then gets tax credits to cover it.”
Needless to say, the Iowa Auditor is not the only one angry. Everyone from Iowa politicians (on all sides) to Iowa residents are angry. I doubt if the State of Iowa will be able to recoup much of the money that it says its owed. But I image there are some filmmakers, producers, and “tax certificate brokers” that are getting a little less sleep these days. Perhaps some houses and Hummers will be sold and perhaps some people will go to jail. (Lawyer fees alone for those being investigated will be ridiculous.) Time will tell. But the moral of the story is don’t commit fraud to get your film made. (Heck, let’s just go out on a limb and say it’s never a good idea to commit any kind of fraud.) And if you just see yourself as a big picture artistic person, be careful of whose advice you follow.
And it’s not like these people were even stealing to make good films. You know, you at least have a little sympathy for the unemployed, down on his luck fellow who steals a loaf of bread to feed his family. But we’re talking about pure greed to produce crap. Just another scam to make money.
And from a pure filmmaker’s perspective it’s sickening to see the inflated fees that were paid to crews on the taxerspayers’ dime. I noticed more than one line item for inexperienced production people who were paid more for a few weeks work than the total film cost of Edward Burns’ new film , Nice Guy Johnny. (Reportedly made with a three person crew for $25,000.) It was released on iTunes this week and as I type this it is currently #7 in iTunes rentals. If you want a true independent filmmaker to look up to and who’s leading the alternative distribution way, Burns is a great choice to follow.