Peter Hoffman, a Hollywood producer accused of trying to bilk Louisiana’s film tax credit program, offered a vigorous defense Wednesday of his renovation of a once-dilapidated Esplanade Avenue mansion into a post-production studio, insisting he never intended to defraud the state.
Testifying on the eighth day of a trial in U.S. District Court in New Orleans, Hoffman, 65, portrayed the government’s case as a colossal misunderstanding and told a rapt jury that all of the finances in the multimillion-dollar project had been in order. Any irregularities, he claimed, were due to oversights on the part of state officials and the auditors hired to verify his expenditures.
“There wasn’t a scheme in which I would get millions of dollars and the state would get nothing,” said Hoffman, founder of the California-based Seven Arts Entertainment.
Hoffman’s appearance followed more than a week of testimony in which prosecutors displayed a virtual mountain of financial records and emails in an attempt to show Hoffman conspired with his wife, Susan Hoffman, and New Orleans businessman Michael Arata to submit bogus invoices and cost reports to obtain more than $1 million in film tax credits.
The government alleges the business partners sought far more than that sum under the Louisiana Motion Picture Incentive Act, and that they inflated expenditures by claiming they bought film equipment they never acquired and conducted “circular” bank transfers to make it appear contractors had been paid far more than they were.
All three defendants face charges of conspiracy, wire fraud and mail fraud. Arata also faces several counts of making false statements to the FBI, which investigated the case.
Appearing condescending at some times and self-deprecating at others, Peter Hoffman presented a striking dichotomy during his daylong testimony.
From the onset, he suggested he was intellectually superior to his accusers, telling jurors he’d graduated from “the Yale Law School” and that he’s well-versed in the intricacies of tax law. He exhibited an encyclopedic recall of transaction dates dating back several years and even appeared to have memorized the sequence of the government’s exhibits.
Yet even as he touted his financial acumen, Hoffman claimed to have waded into perilously unfamiliar territory in taking on the mansion renovation, a venture he said presented a host of challenges and forced him to rely on “people I shouldn’t have.” He bet his company on the renovation, he said, and went to great lengths to ensure it reached fruition.
“I didn’t fully understand all that I was getting into,” he said. “The thing was just much more difficult than we ever anticipated.”
The government’s cross-examination, conducted by Assistant U.S. Attorney G. Dall Kammer, resembled a legal boxing match, with both sides landing their share of punches and each man implying the other had sought to mislead the jury.
Hoffman gave indirect and heavily qualified answers, frustrating Kammer’s attempts to catch him in contradictions. More than once, U.S. District Judge Martin Feldman admonished Hoffman to “stop giving speeches.”
One of Hoffman’s parries focused on the definition of the word “purchase,” a term he insisted does not necessarily denote “making a cash payment for something.”
“The idea of ‘purchase,’ to us, meant an economic commitment,” Hoffman said, claiming the so-called circular transactions he made to contractors were a legitimate means of conducting business.
That interpretation, Kammer countered, differs “from what almost every other person understands by the word.”
Hoffman said he and his partners had been scrambling to qualify for film tax credits because the state’s 40 percent subsidy for film-related infrastructure projects was set to expire at the end of 2008. “We needed to get everything in,” he said.
Even state officials, Hoffman claimed, had been aware that his cost reports on the renovation did not reflect actual expenditures but rather resources “committed” to the project. Some of those commitments, such as an arrangement for film equipment, later fell through. Contractors whose initial “payments” were returned to Hoffman’s company via circular transactions, he said, ultimately were compensated.
“I don’t know how anybody could have not understood what we were doing here,” Hoffman said. “I thought everyone understood that this was a defeasance.”
Prosecutors have accused Hoffman and Arata of providing redacted and illegible bank records to auditors, whose verification of their expenses was required under state law before the tax credits could be issued. Hoffman, however, maintained he acted within the law. He blamed an employee in California for submitting inaccurate invoices that had to be corrected, saying he later forced her to apologize.
Hoffman said his involvement in the renovation would not have been feasible without the tax credits. He said it wasn’t criminal for him to try to maximize the amount of credits he received and that he considered it the burden of state officials to determine, in the end, how many credits the project actually deserved.
While Hoffman said the federal case essentially has derailed his career in film production, he said he continues to take pride in the finished product on Esplanade Avenue, which he described as fully functional and state-of-the-art.
Testimony is expected to end Thursday after Arata calls four defense witnesses. Closing arguments are tentatively scheduled for Friday morning.
Follow Jim Mustian on Twitter, @JimMustian.