Another Hollywood South bomb

Sooner or later everyone who's anyone in Louisiana is going to be involved in a film tax credit scandal of some sort. Today, it's Blaine Kern's turn.

BATON ROUGE - Nearly $1 million in tax credits designed to spur on Louisiana's film industry instead offset the construction costs of Mardi Gras floats built in 2006 by Blaine Kern Artists, according to a report from the legislative auditor's office. The studio claimed the construction of the floats was part of the production cost for "Blaine Kern's Mardi Gras: Building of the Greatest Free Show on Earth," a documentary that was never released for distribution.

Just in case you're interested in ever becoming somebody who is somebody and taking advantage of this program yourself, here's how it works.

1) Figure a way to define whatever it is that you do as being somehow crucial to the "creative cultural character of Louisiana" or some such nonsense. This descriptor can be stretched to apply to just about any activity you can think of such as riding a bike, for example.

2) Take out your mobile phone or your flip cam, or your light remote controlled aircraft and film this culturally significant activity of yours.

3) Say your footage is a "documentary." Call it, "Louisiana Lickin': An In Depth Look At How A New Orleanian Seals His Envelopes" or maybe even "Mr. Ghetto Goes to Wal-Mart" Anything that sounds even remotely saleable.

4) *Poof* Right then and there, you're probably eligible for Louisiana Film Tax Credits. Feel free to hire ex-Saints long snapper Kevin Houser as your sales agent.

Maybe some day an auditor will come knocking at your door asking questions, but hey, "everyone is doing it", so who can complain?

In a voluminous response to the report, attorneys for the company argued that the report singles out Blaine Kern Artists for practices that were widespread among live entertainment documentaries that applied for the tax credit during the same time period. Those productions include Jazz Fest, Voodoo Fest and Essence Fest.

The Hollywood South program is a boondoggle that has cost Louisiana taxpayers billions of dollars but remains untouchable even as the Legislature convenes to consider Governor Jindal's plan to gut public education, mental health (see this week's Gambit not yet online), and state employees' pensions to make up the gap in the budget. But at least, in the process, it has afforded us an opportunity to watch some of our most flamboyant clowns and scoundrels get caught up in hilarious public legal squabbles. Maybe some day someone will turn it into a documentary...

Signs that the seasons are changing

1. Spring is coming. You can see it in the buds beginning to sprout on some of the trees and vines.
   
   



2. The NFL offseason is here. You can see in the stories about the Uncle Rico Scandal beginning to sprout back up in the news.

"We need like some name tags with our picture on it, all laminated and what not. I mean, we gotta look legit man. "

Louisiana Film Studios' Wayne Read laminated up some name tags for Uncle Rico.

Houser last year became an enthusiastic promoter of the newly formed film studio project, which operates in a former Winn-Dixie warehouse on a 25-acre site in Jefferson Parish's Elmwood commercial area. Read said Houser and his wife, Kristen Houser, "shared a vision and a real commitment to this film studio and were part of the LFS team." The couple traveled with Read to the Sundance Film Festival in Utah to help spread the word.

Read said he gave the Housers studio business cards and studio e-mail addresses. Those things were unsolicited by the Housers and they did not use them, said Kevin Houser's attorney Rob Couhig.

I like that the Housers had Rob Couhig deny that they ever touched the tainted business cards and email addresses.... particularly the email addresses which we know can cause all sorts of trouble, especially if you bring your Blackberry to Wal-Mart.

Also of note in this article.

The property is owned by developer George Ackel and a family trust controlled by businessman John Georges, which received the money for the purchase option and for rent. Georges said Read has "not been able to perform under our contract."

Georges has a track record of support for the Saints, buying out empty seats to prevent local TV blackouts of games. He said he tried to help resolve the recent problems among the various parties. But the ongoing legal dispute between Read and lawyers representing the Housers has made it difficult to intervene, Georges said. The family trust does not wish to take an active role in the project, Georges said.

"However, there are many parties interested in taking Mr. Read's position if things don't work out," Georges said.

"The property" referred to in this passage is the converted Winn-Dixie warehouse which serves as Read's studio. From a July 4 T-P story, we learned that Read had originally concealed the fact that he was not the actual owner of the property from his investors. The article states that Read had planned to purchase the building from Ackel but, like so many other aspects of the scheme, that didn't quite work out.

So far, in addition to the numerous Saints players and officials, what I am calling the Uncle Rico scandal has turned up the names Rob Couhig, Ron Forman, and John Georges. Two of those names have been thrown around in the early rounds of handicapping the 2010 Mayoral election. Is "Hollywood South" beginning to rival City Hall as a potential free money and patronage factory? This will continue to hold our attention as the lawsuits start piling up and as we get further into campaign and football season.

Caveat, Douchebag

Our friend Poochie has a Tweeter Tube too.

you think your (sic) buying LA film tac creits. but the fuckn snapper didnt... wow this is a fucked up world we live in

If you really are that impressed with your inherent superiority to the "fuckn snapper" maybe you could demonstrate that by taking the initiative to do some research on the "LA film tac creits" before blindly throwing your money into Uncle Rico's helmet.

"We also need some way to make us look official, like we got all the answers. "

Last week we asked whether former Saints long snapping specialist Kevin Houser was a small-time Bernie Madoff who suckered Saints players and coaches into a ponzi-like investment scheme based on the promise of state tax credits available from a local film studio. But based on this story we read in the T-P Saturday, we're not sure that's quite right. The Madoff character in this situation is Louisiana Film Studios owner Wayne Read.

While more than two dozen Saints football players and coaches fear they may have lost nearly $2 million they entrusted to Louisiana Film Studios owner Wayne Read, they are not the only people in the New Orleans area who say the motion picture executive owes them money.

The financial dealings of the Elmwood film studio that have come to light in the past week show that Read accepted cash payments from the Saints members without returning the tax credit investments or explaining what happened to their money.

After signing a contract for construction work on the studio that he later canceled, he is also being sued by the contractor for $681,000 in unpaid invoices. And St. John the Baptist Parish is still waiting for Read to pay $100,000 that local officials say he owes for bills related to his use of the parish's civic center for a movie production in 2007.

Louisiana's "Hollywood South" film industry sprang up virtually overnight when the state instituted its tax credit finance scheme in the early 2000s (Jesus that's sort of a long time ago now). The state grants tax credits to film production companies who raise cash by selling them at a discount to brokers or directly to investors who can apply them against their income tax liability.

While the tax credit scheme may have helped attract Hollywood star power to Louisiana, it's the back-end trading in taxpayer-financed investment vehicles that has attracted so much local talent to the game. Opportunistic lawyers like Read and former LIFT Productions CEO Malcolm Petal suddenly became studio executives with the power to distribute lucrative tax shelter opportunities to the well-off. According to the T-P, Ron Forman's son was President of Read's firm for a time proving once again that the Formans know a thing or two about making a buck off of government financed entertainment amenities.

But apparently that business model with regard to the film industry is still in need of some tweaking. Petal pleaded guilty last year to bribing a state official for inflating the value of tax credits allotted to LIFT. Read, meanwhile, seems to have been accepting "investments" in tax credits he hasn't been able to deliver.

Kevin Houser, who was dismissed Monday as the long snapper for the Saints, became a point man for Read's effort to raise money among the team's current and former players and coaches. In November, 27 men with ties to the Saints -- including coach Sean Payton, quarterback Drew Brees and former quarterback Archie Manning -- paid large sums of money with the expectation that by the end of March they would get back about $1.33 in tax credits for every dollar of their investment.

In correspondence to Houser in December, Read said he planned to spend $12 million to buy the property and $13 million on reconstruction, and that the credits would be delivered by the end of March.

"No risk to you all," Read wrote.

By the deadline, Read had not even applied for the tax credits from the state film office and had not met at least two important requirements to qualify for them.

So it seems that Wayne Read and not Kevin Houser is running the (somewhat sloppy) Madoff-like enterprise of misleading investors until more investors can cover their investment. Which means that Houser, as the sales stooge, is more like Uncle Rico from Napoleon Dynamite.


Kevin Houser (T-P photo)


Uncle Rico imagining tiny little seahorses

Think about it. Rico is an ex-(sort of) football player who sells crappy Tupperware and herbal breast-enlargement products door-to-door. Houser is an ex-(sort of) football player who sold products of a similar value to his teammates in the locker room. Rico liked to make home movies of himself throwing a football in an unusual fashion to nobody in a corn field. Houser wanted to make movies and was often seen throwing a football in an unusual fashion (between his legs) to nobody (Saints' punters) on the football field. Both men thought they had a quick way to make some "sweet moola". Both really really wish they could go back in time now.

Fun quote of the evening

Kevin Houser interviews Kevin Houser about being cut

"Was I prepared for it? No. Was it heart wrenching? Yes. did I lock myself in the bathroom and cry like a baby? Sure," Houser said.

Is Kevin Houser Bernie Madoff?

Who can blame the T-P, really? When a story drops into your lap that ties together the Saints, the motion picture industry, financial scandal, and Rob Couhig can you really do anything but blow it up all over the front page?

BATON ROUGE -- Archie Manning, Drew Brees and coach Sean Payton are among more than two dozen people with ties to the Saints who together put nearly $2 million into an Elmwood film studio that has failed to return their investments as promised.

Louisiana's film industry is financed through a program which grants tax credits to studios and production companies who then sell them at a slight discount to wealthy investors (professional athletes being one example) for cash. The investors can then apply the credit to their state income tax liability and end up coming in between 30 and 40 percent ahead on the deal. In this case, state tax dollars would reimburse Saints players for fronting the money to make movies. This taxpayer financed system of wealthy individuals shifting money back and forth is the lifeblood of Louisiana's "Hollywood South" film industry. Facing competition from other states, the Legislature extended and increased the credit in the recently concluded session. And while he isn't too keen on crucial mental health services for New Orleans residents, the governor is unlikely to veto this appropriation.

In addition to attracting film production to the area, the tax-incentive program has also caught the attention of the FBI on occasion. Late last year, attorney and LIFT Productions CEO Malcolm Petal pleaded guilty to bribery charges stemming from a scheme to acquire more value in tax credits than he intended to spend on film production.

Bribery is one way to game this system. Another would be fraud.

Manning and an attorney for one of the players said Wednesday that they thought they were taking part in a routine tax credit program offered through Louisiana's motion picture studio incentives until they discovered that the studio project never received state authorization for the credits and that their money was at risk.

"They weren't approved -- there was no reason to think they would not be, " Manning said.

Manning said he had received a telephone call from an FBI agent seeking information about the studio's investment plan.

Wayne Read, chief executive of Louisiana Film Studios, said that he was not aware of any federal investigation and that the Saints investors would get their money back as new financiers are brought into the project, which he said could happen in two weeks.

Read (another attorney-turned-movie mogul, by the way) intends to repay the Saints players, not with tax credits, but with money acquired from "new financiers." Not that Read is actually running a Madoff-like ponzi scheme but we'll easily forgive these Saints players if they continue to squirm over these next "two weeks." In Read's defense, since he hasn't obtained any tax credits, we can reasonably assume that he hasn't tried to bribe anybody.

On the other hand, I know these guys are pro-athletes and all but man this is... not smart.

(Recently released deep snapper Kevin) Houser and the other Saints members made their investments in late 2008 and were due to receive their tax credits by the end of March, according to a tax credit contract and Houser's attorney, Rob Couhig.

The studio has yet to obtain the credits, Read said. Studio officials are talking to potential long-term investors for the project, and an announcement could be made in two weeks, he said. The money from the new backers would be used to return, at a minimum, the original amounts paid by the Saints investors, Read said.

Read said that although he received money from many of the Saints members, he had contact only with Houser. In some cases, players invested money without signing agreements, Read said.

Is this true? Did Saints players and coaches (Sean Payton was an investor) simply drop their five and six figure sums in a hat (helmet?) that Houser and Couhig passed around the locker room? Did they even tell them what it was for? Maybe they just told them they were getting into show-biz. We already know that Payton has been trying to sell a screenplay. Was this his way of getting his beak wet in the industry?