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Credit Report Spurs Criminal Investigation

By Faye Mergel
Published: Tuesday, October 6th, 2009

A credit report for Iowa’s tax credit program revealed several anomalies, prompting state attorney general to launch a criminal investigation. The program is meant to assist Iowa movie industry but auditors found out that there are diversions of government funds into private pockets.

Credit Report Spurs Criminal InvestigationLast month, an independent accounting firm audited a tax credit program officially called the Film, Television and Video Promotion Program. When the credit report was released, it was found out that 20 of the 22 film projects which received credits lack proper invoices and documentation. Auditors noted that there were several changes in contracts which were approved without proper authorization. Purchase of items not needed in film production and use of credits for non-Iowan vendors likewise raised questions during the audit. Some funds were also diverted to labor credits, a move that is not allowed in the program. The credit report also revealed purchasing of luxury vehicles (a Mercedes and a Land Rover), something that auditors found in no way relevant to the tax cut’s aim.

In response to the audit reports, Attorney General of Iowa Thomas Miller will investigate Iowa Film Office’s tax credit program. He will be assisted by Polk County Attorney’s Office, State Division of Criminal Investigation and State Auditor. A spokesperson says that under ethical rules, they are not allowed to discuss specific subjects that are to be focused on during the investigation. However, he made it clear that they aim to recover lost funds that were obtained or diverted legally. They also aim to recover those funds which are not used in accordance to Film Office rules. About $32 million tax credits were issued, and the Iowa Attorney General’s Office aims to recover every bit of it that was not used legally, according to an office representative.

State Governor Chet Culver decided to halt the tax credit program on September 18 after receiving numerous reports of misconducts. In a letter he made 3 days after that date, he requested Attorney General Tom Miller to review Iowa Department of Economic Development (IDED), the office that ran the tax credit program. Because of the allegations, IDED’s director was caused to resign while Iowa’s film manager was placed on a paid administrative leave.

Meanwhile, filmmakers who transferred to Iowa after being lured by the program are now worrying about their future. Some say that they may have to relocate to other ideal locations such as Louisiana and Michigan after Gov. Culver suspended the program which he started back in 2007. Some hotel owners and native Iowans who were hired as film assistants also expressed their disappointment at the suspension, remarking that productions significantly improved their profit.

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