U.S. Attorney Kenneth Polite announced in a press release that Hollywood producer Peter Hoffman, his wife Susan and Michael Arata, of New Orleans, respectively face 405, 45 and 185 years in prison.
The newspapers know this is utter nonsense but report it anyway. That’s the game we play at the end of high-profile trials. The standard caveat — that the actual sentences will “probably” be much shorter — merely serves to insult the public intelligence further. Prosecutors arrive at these outlandish numbers by adding up the maximum sentences for every count and assuming they will be served consecutively, but everyone knows that is not how the system works.
Even if judges were not constrained by sentencing guidelines, they could not be crazy enough to regard four centuries behind bars as just punishment for employing creative accounting to secure state tax credits.
Although whatever sentences Arata and the Hoffmans receive will be well within their life expectancy, it is still hard to figure out why the feds decided to make this case a priority and spend a fortune pursuing it. After a protracted investigation, the trial lasted two weeks with dozens of witnesses, some flown in from as far afield as California and England. Yet when it was all over, it was still impossible to identify a victim.
Sure, the Hoffmans and Arata broke some laws, but the state did not lose any money as a result. It was the defendants who probably wound up out of pocket. Certainly, they deserve to pay a price for their misdeed, but the eastern district must contain crooks more deserving of the full-court press we have just witnessed.
This is the latest case to arise from the state subsidies paid for movies shot in Louisiana. The program allowed filmmakers to recoup 40 percent of “infrastructure” costs, and the defendants put in three claims totaling more than $4 million for the conversion of a pre-Civil War Greek revival mansion into a film studio.
That the work was completed is apparent to anyone strolling along Esplanade on the edge of the French Quarter.
There stands the Whann-Bohn house, which was a crumbling wreck inhabited by vagrants until the defendants bought it. Now it is resplendent, housing the post-production facilities that keep movie-makers in town when they would previously have hightailed it to, say, California.
According to Peter Hoffman, renovating the building cost $12 million.
Cash-flow problems evidently resulted when it came to equipping the studio, and the defendants resorted to cooking the books, claiming tax credits for purchases not yet made and transferring money in and out of bank accounts in order to bamboozle auditors. That jiggery pokery came to light after the state had shelled out $1.1 million for the first claim, whereupon the other two were denied.
Nevertheless, no less an authority than Stephen Moret, Louisiana’s economic development secretary, says the defendants had enough approved expenses to cover the $1.1 million they received. Whether the denied claims were entirely bogus, or whether Arata and the Hoffmans were entitled to some further reimbursement, is a question that will presumably figure when Judge Martin Feldman decides what sentences to impose.
But because the state is not out a dime, the feds’ lust for lengthy prison stretches seems disproportionate. These convictions, however, seem likely to stand, given the overwhelming evidence that tax-credit claims were falsified. Arata is in even deeper trouble because he was found guilty on four counts of lying to the FBI. He and Peter Hoffman are attorneys and are bound to forfeit their licenses, whatever criminal sanctions they face. No wonder they looked stunned when the verdicts were returned.
The feds may exult over prison sentences, but it takes a mean soul not to feel some sympathy over a ruined life. Certainly, Arata’s extended family have no love for federal prosecutors. Arata’s wife, Emily, is one of New Orleans Mayor Mitch Landrieu’s deputies. Her sister, former Jefferson Parish Councilwoman Jennifer Sneed, is married to Fred Heebe, the target of a major federal investigation until he exposed then-U.S. Attorney Jim Letten’s assistants as the authors of defamatory and prejudicial comments posted online under aliases.
Arata and the Hoffmans now will be hoping that Feldman gives them a break at sentencing. Assistant U.S. attorneys won’t share their hope, but they won’t be bandying Polite’s numbers around either.
James Gill’s email address is email@example.com.