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If this is a crime, they won't be able to build enough jails

February 09, 2010

Welcome, Instapundit readers! For some background on the film credit scandal, the including taxpayer-funded Mercedes, go here. Our full film credit coverage can be found here.

It's now a crime to be a bungling bureaucrat? At least that's the way it looks from the first indictments in the Iowa Film Office criminal investigation. O. Kay Henderson reports:

Former Film Office manager Tom Wheeler of Indianola was fired in September after questions were raised about how state tax credits to film and TV productions were being managed. Wheeler has been charged with non-felonious misconduct in office, a serious misdemeanor. If convicted, Wheeler faces a fine of up to $1875. In addition, he could be sentenced to up to a year in prison.

I'm sure that to Mr. Wheeler the charges are deadly serious, but if that's all they can come up with after a four-month investigation, it's pretty weak. They make no allegations that Mr. Wheeler benefited from the incontinent granting of film credits. It appears to be a charge of criminal ineptitude. If that's illegal, then the State Capitol, the Hoover Building and the Lucas State Office Building are dens of crime.

The Iowa State Capitol: a den of criminals?

Attorney General Tom Miller also announced more serious theft charges against two Minnesota filmmakers, accusing them of submitting inflated expenses to claim excessive film credits for a film called "The Scientist." These expenses include two $225 brooms and a $1,225 12-foot stepladder.

Documents in the case allege a newly-disclosed way the Film Office permitted the creative class to loot the state treasury:

Wheeler permitted filmmakers to allow owners of the filmmaking entity to be paid to provide "qualifying expenditure" services to the film project, provided those parties had tax IDs different from the tax ID of the filmmaking entity. This artifice, which was among those employed by the producers... allowed issuance of expenditure tax credits for payments to producers, directors and others who are expressly excluded in the Act's definition of "qualified expenditures."

So the State of Iowa subsidized the creation of tax ID numbers. That surely did great things for economic growth.

The documents also outline now-familiar practices of using strawmen LLCs to pretend that money spent out of state was really an Iowa expense, and using "in kind" (i.e., imaginary) expenses to obtain more credits.

The charges are interesting for what they leave out. In addition to not charging Mr. Wheeler with taking any improper personal benefit, the Attorney General has filed no charges relating to the infamous tax credits for a Land Rover and a Benz.

Mr. Wheeler denies any wrongdoing. From a criminal perspective, that could well be true. But from a policy and administrative viewpoint, Mr. Wheeler has plenty to answer for. So do his 147 accomplices in the legislature and his bosses in the Department of Economic Development and the Governor's Office.

Links:

Des Moines Register Coverage
AP Coverage
Tom Miller Press Release
Documents in the Wheeler Case
Documents in the Filmmaker Charges.

Tax Update Coverage of the Film Criminal Investigation

Let them eat canapes

UPDATE: More from the Tax Policy Blog

Tags: Corporate Welfare.Economic development.Film accountant report.film credits.Film criminal investigation.harold hill.O Kay Henderson.Thomas Wheeler.Tom Miller.