Hollywood’s gold rush to Iowa blew up in the wake of a scandal late last week when Gov. Chet Culver fired Iowa Film Office director Tom Wheeler and suspended Iowa’s incentives program.
Culver froze issuing more tax credits and payment of qualified expenditures, after learning the film office approved nearly everything for filmmakers, including the purchase of luxury cars.
An Iowa Department of Economic Development (DED) internal investigation suggests very little documentation exists for the $31 million in tax credits awarded to Iowa film projects, according to the Quad-City Times.
The investigation found examples of filmmakers using cash from the tax credits to buy – not lease – a Mercedes-Benz and Land Rover that never were used in films.
Other allegations include payroll checks written to family members and acquaintances with limited involvement in the films, the paper stated.
Mostly, the investigation showed lousy accounting creating an atmosphere for fraud: “Ledger sheets that were accepted as claims were vague and overly broad. It appeared everything was allowed.
“Tax credit certificates were issued for the full amount requested. It appeared nothing was ever disallowed,” wrote Mike Tramontina, Iowa DED director, in a memo before he resigned, the Quad-City Times reported.
Culver told The Des Moines Register Monday that he would work with filmmakers that have received commitments for tax credits from the office, but, the paper reported, he stopped short of pledging the state would honor all of the credits, pending a review.
“This is not about harming the growing film and television industry in Iowa, but about protecting public funds and the best interests of Iowans,” Culver said in an earlier news release.
The program could cost the state up to $300 million, said an Iowa lawmaker, because producers rushed to get $208 million in tax credits in May and June before a new $50 million spending cap began July 1, without being reined in by the DED.
