Federal prosecutors rested their case Tuesday against three business partners accused of defrauding Louisiana’s film tax credit program, capping seven days of testimony in which the government sought to outline a web of deception it says was intended to inflate the costs of renovating a post-production studio on Esplanade Avenue.
Prosecutors called some two dozen witnesses, including auditors, contractors and others connected to the construction project. They also presented jurors with hundreds of financial documents and emails the government contends show a conspiracy to fool the state into issuing film tax credits that had not been earned.
Defense attorneys for New Orleans lawyer Michael Arata, Hollywood producer Peter Hoffman and his wife, Susan Hoffman, will present their cases next. U.S. District Judge Martin Feldman said he expects the trial to conclude by Friday.
In what could prove to be a highlight of the often monotonous proceedings, Peter Hoffman, who has previously beaten federal charges, is expected to take the witness stand Wednesday morning after days of appearing to grow increasingly frustrated at the defense table.
Hoffman likely will tell jurors that he spent hundreds of thousands of dollars of his own money on the studio renovation and will blame shoddy auditing for a series of accounting irregularities that raised red flags.
Prosecutors, on the other hand, may confront him about a number of “circular” transactions they say he orchestrated to make it appear that his California-based production company, Seven Arts Entertainment, had purchased film equipment that it never acquired.
Arata’s defense attorney, Billy Gibbens, said he intends to call five or six witnesses. Pat Fanning, who represents Susan Hoffman, said he may call one witness.
All three defendants face charges of conspiracy, wire fraud and mail fraud for allegedly exaggerating their expenditures on the once-dilapidated Esplanade Avenue mansion to obtain more than $1 million in tax credits under the Louisiana Motion Picture Incentive Act.
Arata, a businessman who later sold the tax credits, also faces several counts of lying to the FBI.
While earlier testimony centered in large part on Peter Hoffman and his dealings with various accountants and project participants, the focus Tuesday afternoon shifted to Arata and whether he made a series of false statements to the FBI as it investigated his role in the renovation.
FBI Special Agent Robert Blythe said Arata sought to mislead him about whether he provided complete financial records to auditors — the state requires that expenses be verified by an independent certified public accountant before film tax credits are issued — and whether he believed Peter Hoffman’s company actually had acquired some equipment it claimed to have purchased.
Blythe told jurors that he found it “very hard to believe” Arata did not know that the equipment purchase had fallen through.
Federal authorities claim Arata also lied about his continued involvement in the renovation project even after he wrote a letter to Peter Hoffman in 2009 terminating their business relationship.
Blythe acknowledged on cross-examination, however, that the government can’t prove Arata actually saw a report claiming he’d been paid $350,000 in legal fees for the project before the report was submitted to the state. “I can’t put it in his hand,” Blythe said.
Blythe also admitted making inaccurate statements to the grand jury regarding Susan Hoffman, who Fanning claims was unaware of many of her husband’s dealings. Under questioning from Fanning, Blythe said he hadn’t realized that someone other than Susan Hoffman had signed her name on some loan documents, contrary to what Blythe told the grand jury.
“I should have put it together,” the agent said. “I don’t want to make excuses.”
The government still maintains Susan Hoffman benefited from the fraud scheme and used her relationship with a local contractor to further it.
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