NEWS
Posted 20 April, 2010 in IA News
WhoTv.com
February 8, 2010
Criminal charges have been filed against two filmmakers, their companies and the former manager of the Iowa Film Office in connection with the alleged mishandling of tax incentives.
The Iowa attorney general’s office filed first-degree theft charges Monday against Wendy Runge, of St. Louis Park, Minn., and Matthias Saunders, of Minneapolis. A charge of nonfelonious misconduct was filed against former film office manager Thomas Wheeler, of Indianola.
Runge is part owner of Polynation Pictures, LLC, and Saunders owns Maximum Productions LLC. They are accused of unlawfully inflating values on applications for tax credits totaling more than $10,000. Runge and Saunders also created The Scientist, LL, as an Iowa company to make a film that would use Iowa film tax credits.
Gov. Chet Culver fired Wheeler last September. He’s accused of failing to verify eligibility of applicants for tax credits.
Wheeler’s attorney, Gordon Fischer, says the charges against Wheeler aren’t supported by facts or state law.
Posted 24 March, 2010 in IA News
Although many thought that the program was permanently dead, Iowa has instead suspended its Film incentive program for another two years, to July 1, 2013. This will allow time to properly re-tool the program, and for the Iowa Attorney General to sort through criminal and civil matters stemming from allegations of mismanagement, lax oversight, irregularities and theft. The Attorney General will consider lifting the suspension early if the program can be retooled sooner.
Posted 7 March, 2010 in IA News
Legislation has been introduced to repeal the film incentive (SF 2118) or to suspend registration of new projects (SF 2319). In addition, the Attorney General’s Office has charged a number of filmmakers and the former film office manager with criminal conduct.
Criminal charges filed in Iowa film tax-credit scandal
http://www.desmoinesregister.com/article/20100208/NEWS10/100208018/-1/AMES/Criminal-charges-filed-in-Iowa-film-tax-credit-scandal
Area filmmakers concerned about future of program
http://www.thehawkeye.com/story/film-credits-021110
Posted 7 March, 2010 in IA News
IOWA – The state suspended its program because of accounting and reporting irregularities, resulting in great uncertainty for its’ future.
Posted 10 February, 2010 in IA News
The Iowa Attorney General has filed criminal charges against Tom Wheeler, the former director of the Iowa Film Office, plus two producers.
More Information: http://www.whotv.com/news/who-story-film-mess-020910,0,2294751.story
Posted 31 January, 2010 in IA News
http://www.desmoinesregister.com/article/20100109/NEWS10/1090340/-1/SPORTS12/Panel-Scale-back-tax-incentives
Posted 29 November, 2009 in IA News
IOWA (as advised by Incentives Office) – has lifted its suspension of the Film Promotion Tax Credit Program, but only for projects previously submitted by producers. This includes the 28 films that have received contracts, plus an additional 105 films that have applied. No new applications will be accepted until after the Governor and legislature have had a chance to evaluate the program. Tom Miller, the attorney general, stated the formula used for awarding the tax credits was not properly administered, and the rate was never 50%. More details to follow.
Posted 2 November, 2009 in IA News
Build It With Tax Incentives, and Hollywood Will Come
By JOE BARRETT
DES MOINES, Iowa — All summer long, this sober Midwest city rubbed shoulders with actors such as Forest Whitaker, Adrien Brody and Elisabeth Shue. No fewer than four Hollywood productions were shooting in town.
“It was very surreal,” says Michael Braun, a 25-year-old bartender at the Continental, a restaurant near the state capitol. He recalls watching Nick Stahl in the HBO series “Carnivale” one day before work and then serving the actor dinner at the bar that night. “You don’t expect that in Iowa,” Mr. Braun says.
Now, Des Moines, population 200,000, is dealing with a nasty hangover. A lavish tax-incentive program that brought Hollywood to its doorstep has come to a halt amid allegations of faulty oversight, poor record-keeping and potentially criminal abuse.
One director bought himself a $61,000 Range Rover and a feather bed, as well as an iPod for his 15-year-old son. Another picked up a new Mercedes-Benz for $67,000. All the purchases were made with the help of a 50% tax credit, courtesy of the good people of Iowa.
Iowa’s small but growing film industry is now in a state of suspended animation. Gov. Chet Culver temporarily halted the tax credits. The state film program’s director was fired, and his bosses at the Iowa Department of Economic Development resigned. The state attorney general has launched a criminal investigation.
At least a dozen Hollywood projects that were to shoot in coming months are taking the action to other states, diverting millions of dollars from Iowa’s economy. A half-built pirate ship sits in a city mall turned soundstage for a fantasy film called “Blackbeard” that may never be made. Many young Iowans who thought they had found a promising homegrown industry are considering leaving the state.
“Three months ago, everything was looking rosy,” says Nicole Tiernan, 32, who was laid off as a paralegal in March last year but quickly shifted into a series of behind-the-scenes movie jobs. “Now, it’s a big freakout.”
Many states have chased silver-screen fantasies with generous incentives to lure filmmakers. Results have been mixed. Iowa went whole hog, taking a cue from the most famous film ever shot there, “Field of Dreams,” the 1989 Kevin Costner vehicle that popularized the slogan: “If you build it, they will come.”
In 2007, the state legislature passed the film incentive program, which granted filmmakers a 50% tax credit on their spending in the state. Since they couldn’t use the credits themselves, the filmmakers sold them at a discount through brokers to businesses and individuals who owe Iowa taxes.
The program, billed as “Half Price Filmmaking,” was slowly winning over Hollywood. By this past summer, 22 films had received tax credits totaling $32 million. And more than 100 projects were in various stages of applying for hundreds of millions more before the program was put on hold.
Thousands of Iowans have hammed it up as extras earning minimum wage on projects like the cable-TV remake of Stephen King’s “Children of the Corn,” shot near Davenport, and the theatrical do-over of George Romero’s camp horror flick “The Crazies,” shot in tiny Lenox.
MARY-KATE GALES
Mary-Kate Gales, a 31-year-old makeup artist in Des Moines, got a job giving actress Susan Sarandon manicures and pedicures during last year’s shooting of the feature “Peacock.”
Over the winter, Ms. Gales flew to California for training in special-effects makeup that helped her land a job doing the zombies in “The Crazies.” Then, in September, she designed the hair for Abigail Breslin, Ms. Shue and others on the film “Janie Jones.” She says, “It’s really great to have this industry in your backyard.”
Businesses benefited from out-of-towners’ spending and Hollywood cachet. Angela Petraline, owner of a Des Moines vintage-clothing store called Dorothea’s Closet, says Rose McGowan and Amy Smart, in town in the summer to shoot “Dylan’s Wake,” dropped by and bought bags of dresses.
Jeremy Alvarez, a 25-year-old guitar teacher, landed a gig tutoring Ms. Breslin and actor Alessandro Nivola after striking up a conversation with two guys playing pool at the Locust Tap, a grungy downtown bar.
“They asked me to do it, and I was like, ‘Cool, yeah,’” says Mr. Alvarez of the pair, who turned out to be the producer and director of “Janie Jones.”
The tax-credit controversy leapt onto the public stage Sept. 18, when Mike Tramontina, head of the Iowa Department of Economic Development, abruptly resigned. He had just received a briefing from an accounting firm he hired that found the film program had lax rules and weak oversight. Among the eye-opening details were the purchases by two filmmakers of cars for their personal use.
That same day, Gov. Culver, a Democrat, suspended the payment of any new tax credits under the program. The next Monday, Mr. Tramontina’s deputy resigned, and the interim head of the department fired Tom Wheeler, head of the film office.
Mr. Wheeler was single-handedly negotiating contracts, reviewing paperwork and awarding credits for a program that proved more popular than expected. Mr. Wheeler’s lawyer declined to comment.
Official Iowa was stunned. Gov. Culver said that “Iowans will not be taken for suckers” and vowed not to restart the program until proper controls are put in place.
The program granted filmmakers tax credits valued at 50% of the cost of production in Iowa, including payroll, lodging, food, entertainment and transportation. Rules allowed for the purchase of one car — but didn’t specify whether it had to be used behind the camera or in front of it. After shooting wrapped, filmmakers submitted budgets and received tax-credit certificates. They then sold the credits via brokers to Iowa taxpayers, who could apply them to their tax bills.
Filmmaker Bruce Isacson bought the Range Rover Sport, the feather bed with fitted sheets — which cost a total of $1,600 — and an iPod while shooting “South Dakota,” a film that received some $1.7 million in tax credits.
The 60-year-old Californian says he has a bad back and was in Iowa for months, so he bought himself a mattress like the one he has at home. The Range Rover doubled as his office on the set. “I could have rented an RV,” he says. His son, who wrote and performed music for the movie, needed the iPod to download music used in the film, Mr. Isacson says.
“Everything we did was for a purpose and was used in the film,” he says. “We dotted every single line.”
Director Donald Borchers left Iowa with a new Mercedes-Benz he bought with tax-credit help after shooting “Children of the Corn” last year. Mr. Borchers didn’t respond to an interview request.
On Oct. 5, the accounting firm, Clifton Gunderson LLP of West Des Moines, submitted its full report, citing other potential abuses, including contracts that were altered after they had been signed and filmmakers who claimed millions of dollars in expenses for product-placement arrangements that cost the production nothing. Iowa’s attorney general launched a criminal probe. No one has been accused of wrongdoing.
Despite calls from Iowans in the film business to get the program restarted quickly, many fear that Hollywood may be scared off permanently.
“I’m dead,” says Bill Marinella, 40, a casting director who relocated his business from California to Des Moines in May. He plans to keep his Iowa residence because he likes the area, but says he’ll have to travel to states like Michigan and Louisiana where films are moving.
“It’s not that big of a scandal,” he says. “How can it be a scandal if there’s no women and sex involved?”
Write to Joe Barrett at joseph.barrett@wsj.com
Printed in The Wall Street Journal, page A1
Posted 13 September, 2009 in IA News
L.A. film company relocates to Bluffs
By Kim Bousquet
WORLD-HERALD NEWS SERVICE
COUNCIL BLUFFS — An 18-year-old film company headquartered in Los Angeles has relocated to Council Bluffs.
Steve Lustgarten, a native of Omaha and the president of the film distribution and production company LEO Films, was up front about why the company moved.
“The Iowa tax credits attracted me,” Lustgarten said.
In May 2007, Iowa began offering filmmakers financial incentives to produce their projects in Iowa. The state offers transferable income tax credits valued up to 50 percent of the total qualified spending in Iowa.
Bills that would have given similar incentives to moviemakers in Nebraska have been introduced in the State Legislature, but none has passed yet.
Iowa instituted a number of changes this year to try to make the state an even more attractive location. Under the original program terms, no pay to the director, principal producer or principal talent was eligible toward the total qualified spending in Iowa — even if those people were Iowans. Now, portions of pay to the director, principal producer or principal talent are eligible if the project’s total spending meets guidelines.
The incentives seem to be working. According to the Iowa Film Office Web site, just two movies were filmed in 2006. Since 2007, fourteen films have been made or shot scenes in Iowa.
On the list was Polynation Pictures LLC’s “The Scientist,” which had scenes shot in Council Bluffs in October 2008. Like LEO Films, Polynation, formerly of Minnesota and owned by Omaha native Wendy Weiner and writer-director-producer Zach LeBeau, moved its home base to Iowa because of state tax incentives.
“The legislation helps attract film companies,” said Bob Mundt, president and CEO of the Council Bluffs Area Chamber of Commerce. “But we’d also like to think our beautiful city, convenient location and affordability make Council Bluffs an ideal place to make a movie. We’d love to do more.”
More films have been shot in the area since “The Scientist” and have yet to be added to the film office’s list. In July, Reel Entertainment stayed in Council Bluffs for its work on a documentary about RAGBRAI, the popular annual bike ride across Iowa.
According to the Convention and Visitors Bureau, two other production companies are on the books to shoot here, not including LEO Films. A horror comedy is being filmed in the area, and Ten/Four Pictures is filming the dark romantic comedy “Lucky” in town.
The films pump money into the local economy.
“We love having movies filmed in Council Bluffs because the crew stays in our area hotel rooms. Sometimes film crews need office space, extra actors, and the crews certainly need food, fuel and entertainment in the off-hours. All those expenses mean a direct economic impact of over $150,000. Overall that means nearly a half-million dollar impact in indirect benefit for Council Bluffs,” said Josee Beier, director of convention sales for the bureau.
Lustgarten and LEO Films have already relocated to the area, though no offices are set up. The plan is to begin shooting the feature-length thriller “My Own Blood,” written, directed and produced by Lustgarten, this month. Lustgarten expects filming to take three to four weeks.
Still in the planning stages, the scenes will be shot mostly around the Bluffs, using locations like houses, apartments and restaurants as backdrops for scenes. For some scenes, though, shooting may be done in Des Moines.
The cast and crew will be mostly local hires, as Lustgarten brought no one along with him in the film company’s move. He said the cast will be between 12 and 15 people, with about 10 to 20 extras. The crew will be about 20 people.
“No one is from L.A.,” Lustgarten said. “I’m trying to source it all locally.”
Lustgarten got his start in film during the indie film movement’s early days. “American Taboo,” his portrayal of a man obsessed with his teenage neighbor, won a Student Academy Award in 1983, beating out Spike Lee’s “Joe’s Bed-Stuy Barbershop: We Cut Heads.”
He moved to L.A. and worked on the creative side of film making before switching over to the business side. He started LEO Films in the fall of 1991, which has developed 80 feature films.
An eclectic film roster reflects the company’s aim to provide a broad base for independently produced films no matter what their subject matter and audience. Some of the company’s 2009 releases include “Flesh Suitcase,” a film about drug mules; “Eye,” a cat-and-mouse thriller about a female judge who has discovered her daughter has been kidnapped; and “Space Zombies,” a film about the living dead from outer space who come to Earth.
With “My Own Blood,” Lustgarten has gotten back into the creative side of filmmaking. It will be the sixth film he has written, directed and produced.
Lustgarten said he hopes to stay in the area and produce more films.
“As long as we can make it work, we’ll do quite a bit of films,” Lustgarten said.
Posted 22 March, 2008 in IA News
DES MOINES, Iowa (AP) — To make his movie, “South Dakota,” Bruce Isacson turned to Iowa.
The Los Angeles-based filmmaker has chosen the town of Earlham — about 30 miles west of Des Moines — as the setting for his new movie about a couple of high school students who end up with a surprise pregnancy.
“After visiting Iowa, I decided it was the perfect South Dakota,” said Isacson, a New York City native. “It has everything I envisioned.”
A portion of the story that takes place in Pennsylvania will also be shot in Iowa.
Not only is Iowa good at doubling as other places, it also offers large tax incentives that are attractive to independent filmmakers like Isacson. The state passed a law last May, offering 50 percent tax credits for films shot in Iowa with budgets of at least $100,000.
Half the credit amount goes toward helping film crews regain in-state expenses like hotel rooms and meals. The rest benefits the project’s original investors.
“When we found out (about the incentives), we almost called twice to make sure,” said Robert Gibson, production manager for “South Dakota.”
Gibson said incentives are a huge help for their budget, which is between $2.5 million to $3 million. The less they have to fork out for taxes, the more they can put toward the film’s content.
Isacson’s production team arrived in the state last week to begin auditioning Iowans for supporting roles. Producers are hiring local talent for supporting roles and using unknown California actors for title roles, which will also cut costs.
Iowa Film Office Director Tom Wheeler said the state’s large incentives are drawing people who wouldn’t otherwise come here. The rewards are so good compared to other states that it can sound “too good to be true,” he said.
“South Dakota” is the third project to use the new tax incentives. Others include Becky Smith’s “Duck Farm No. 13″ set in McGregor as well as Anna Boden and Ryan Fleck’s “Sugar” that was filmed in Burlington and Davenport.
Wheeler anticipates more people will consider shooting in Iowa, as local production companies build up stocks of cameras, lights and other equipment and as local talent deepens. He plans to tout Iowa’s incentives at a trade show next month in Los Angeles.
The film incentives are also boosting work for Iowa actors. Deb Copeland manages Copeland Creative Talent, a talent agency in Des Moines. Last week she sent out a call for actors needed for about two dozen supporting roles in “South Dakota.”
“We’re getting more attention with the help of the film incentives,” Copeland said. “All of a sudden, we were getting lots of calls, and I thought, ‘My God, are we that much better than other states?”‘
For now, a buzz is building in Earlham. Producers have met with local school board officials to discuss plans for filming.
“There are going to be ancillary economic benefits for the community, even if it’s people buying gas or stopping to have lunch at the places downtown,” said Superintendent Michael Wright.
Isacson, the writer and director, said it’s the ideal setting for his story.
“It’s that perfect Midwestern small town that Americans have fantasies about,” he said.
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