Louisiana film recruiter sentenced to two years for tax credit bribery

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Louisiana film recruiter sentenced to two years for tax credit bribery

Thu Jul 30, 2009 @ 10:48AM PST

By Eriq Gardner


Neworleans After Hurricane Katrina, Louisiana began offering nice tax incentives to film production companies who pledged to set up shop in the state. As a result, film and television production there boomed, from $12 million in 2002 to more than $1 billion annually today.

Now comes some shocking news about the guy whose job it was to recruit movie companies to make films in Louisiana.

Mark Smith has been sentenced to two years in prison for accepting bribes from a film producer in exchange for giving away too many lucrative state tax credits.

Smith cooperated with federal investigators after a two-year probe uncovered $135,000 worth of bribes channeled from Malcom Petal, the co-founder of LIFT Prods. through a local attorney named William Bradley. Both Petal and Bradley have pleaded guilty. 

As one example of the corruption, The Times-Picayune reported LIFT was responsible for exaggerating production costs on Kevin Costner's Mr. Brooks. The film was cleared for tax credits based on $34 million in expenditures despite a stated budget of less than $20 million. In some instances, productions got great tax credits and were allowed to sell unused ones to investors who had nothing to do with film production. 

"We live with the damage today," said U.S. District Judge Kurt Engelhardt at Smith's sentencing yesterday.

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The Hollywood Reporter, Esq. blog focuses on how the entertainment and media industries are impacted and influenced by the law. It is edited by Matthew Belloni with contributions from veteran legal reporter Eriq Gardner and others. Before joining The Hollywood Reporter, Belloni was a lawyer at an entertainment litigation firm in Los Angeles. He writes a column for THR devoted to entertainment law. Gardner is a New York-based writer and legal journalist. Send tips or comments to Matthew.Belloni@thr.com

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