The biggest beneficiary of Iowa's film tax credit boondoggle is in for more Iowa hospitality than he hoped for. Dennis Brouse faces up to 10 years in prison after a Polk County jury convicted him yesterday on a charge of "fraudulent practice" for claiming improper tax credits from the Iowa Film Program. He was acquitted on two other charges.
In happier times, Mr. Brouse had programs on up to 170 public TV stations, according to the Des Moines Register.
The prosecution charged that Mr. Brouse claimed inflated values for expenditures on films produced in Iowa. The state awarded him $9.2 million in transferable tax credits for the pretend spending, which he sold to investors at a discount for cash. From the Register's story:
Brouse made $3.1 million after his expenses were paid and he obtained the state’s “half-off” credits for filmmaking — before his productions were distributed, according to Iowa’s Department of Revenue.
He split the proceeds with tax credit broker Chad Witter, who faces trial next month on charges related to the program.
As I had speculated, the prosecution told the jury about pretend "sponsorship" expenses, including a $1 million expense that the "sponsor" claimed was so "grossly overvalued" that it refused to sign off on it.
The film credit program was touted as an "economic development" boon when it was voted into law over the "no" votes of only three of the 150 members of the Iowa legislature. Almost until the very end it received nothing but credulous Tiger Beat-style coverage from the Des Moines Register and other news outlets -- with one exception (CORRECTION: there was another). The Register's story tells whose economy was really developed:
Among the other purchases Brouse made before the film program collapsed: a Nebraska ranch for more than $566,000, bought in May 2009 just after $1 million in credits were transferred by the state.
Fortunately for Iowa, this $30-million plus boondoggle is dead. Unfortunately, this is only one of dozens of economic development credits that Iowa has, all operating in the shadows with little oversight, and almost none from outside media outlets. While the administration of the film credit program was spectacularly bad, it takes a leap of faith to believe that other programs that provide transferable or refundable tax credits to the well-connected and to politicians in the name of "affordable housing," "green energy" or "downtown redevelopment" are run carefully and accurately and claimed with complete honesty.
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