A federal jury began deliberating Friday afternoon in the case of three business partners accused of defrauding Louisiana’s film tax credit program.

After hearing two weeks of testimony and viewing hundreds of financial documents, jurors must decide whether Hollywood producer Peter Hoffman, his wife, Susan, and New Orleans lawyer and businessman Michael Arata conspired to bilk the state by inflating expenditures in their conversion of a run-down mansion on Esplanade Avenue into a post-production studio.

After not reaching a verdict Friday after about two hours of deliberations, jurors are scheduled to reconvene Monday morning.

The case is among several prosecutions in recent years stemming from the Louisiana Motion Picture Incentive Act, a subsidy program that has been criticized as being too generous. The state at that time covered 40 percent of qualified expenses for film-related infrastructure.

Prosecutors accused Arata and the Hoffmans of seeking to exploit the program at every turn in their renovation of the antebellum mansion at 807 Esplanade Ave., a three-story, 10,617-square-foot home. The project received more than $1 million in tax credits, which the state decided to honor even after the federal investigation began.

Prosecutors claim the business partners sought far more than $1 million in credits by submitting bogus cost reports and forged invoices and by conducting “circular” bank transactions that made it appear they had spent money on the project that they hadn’t.

All three defendants face charges of conspiracy, wire fraud and mail fraud. Arata, who then sold the tax credits, faces additional counts of making false statements to the FBI.

In closing arguments, Assistant U.S. Attorney G. Dall Kammer said the business partners had spun a “web of lies” that involved shell companies, a “circular transaction fest” and complete disregard for state law. He said they intentionally complicated what was supposed to be a simple process of applying for tax credits and “pulled the wool over the eyes” of auditors they hired to verify their expenses, in part by giving them incomplete financial documents.

While the defendants pointed out that the renovation was in fact completed and insisted the state issued them fewer tax credits than the project actually warranted, Kammer said the state issued some $400,000 in credits for film equipment that was never acquired.

Prosecutors called two dozen witnesses and relied on a slew of records and emails, seeking to portray the business partners as opportunistic crooks.

“It’s about people coming in and taking advantage of our laws,” Kammer said. “It took the FBI a year to figure out what these guys did.”

Defense attorneys countered that the project’s finances were in order, and they questioned the federal government’s motives. The state wouldn’t even be able to sue in civil court because it “hasn’t suffered any damages,” said Billy Gibbens, one of Arata’s attorneys.

“The federal government does not like this program,” Gibbens said, referring to the Louisiana Motion Picture Incentive Act.

The proceedings were dominated by accounting jargon, though it was unclear which side stood to benefit from the complexity of the case.

Defense attorneys suggested that the complicated nature of the state’s film tax credit law left applicants prone to oversights that shouldn’t necessarily be construed as criminal intent.

“This was a lot of paperwork,” said Lance Unglesby, an attorney for Peter Hoffman, the founder of California-based Seven Arts Entertainment. “Making some mistakes happens.”

Both Arata and Susan Hoffman sought to distance themselves from Peter Hoffman during the trial, though without directly pointing the finger at him. Arata said he terminated his business relationship with Hoffman before several of the suspicious transactions took place.

Prosecutors pointed to emails they said contradicted this claim.

Susan Hoffman’s attorney, Pat Fanning, established in his cross-examination of an FBI agent that grand jurors heard several erroneous statements about Susan Hoffman’s involvement in the case before handing up an indictment against her. He suggested she was charged only because she is married to Peter Hoffman, whom he said the federal government regards as “the biggest crook on earth.”

Closing arguments became emotional when Gibbens spoke of the stakes for Arata and his family. Arata’s wife, Emily Arata, a top deputy to Mayor Mitch Landrieu, wept in the front row.

Follow Jim Mustian on Twitter, @JimMustian.