Film financier sues Iowa over unpaid film credits
DES MOINES, Iowa (AP) — A Rhode Island man who financed movie projects filed a lawsuit in Polk County District Court Monday claiming the state of Iowa ruined his business and cost him millions of dollars when it suddenly ended its film tax credit program in 2009.
Anthony Gudas, of Providence, R.I., says his company, Tax Credit Finance, borrowed money to finance four film projects based on contracts with the state. Iowa had promoted a program in which it would issue tax credits that paid half of a film's production costs.
However, a state audit uncovered $26 million in tax credits that were improperly issued by the Iowa Department of Economic Development, and then-Gov. Chet Culver halted the program in September 2009. An investigation led to 10 criminal cases in which seven people were eventually convicted.
Gudas is alleging breach of contract in court documents filed Monday, and is suing the department for unpaid tax credits plus interest and costs. Gudas had spent about $9 million in Iowa and is owed about $4.5 million, said his attorney, Angela Campbell of Des Moines. That does not include lost profit.
The state is represented by the Iowa Attorney General's office. Deputy Attorney General Jeffrey Thompson said Monday in a statement that he can't comment on the merits of the lawsuit.
Gudas says he had $5.5 million invested in Iowa projects, and was still obligated to pay $22,000 in interest payments a month. He said he also overpaid about $858,000 in interest.
Gudas says banks stopped financing film projects, and he eventually went out of business.
"After Iowa's film fiasco, the national market changed for film investing because banks no longer considered investments into state film programs a safe investment, especially not investments into the state of Iowa," the lawsuit says. Gudas later began a different company that relies on borrowing from outside the United States at higher interest rates.
Campbell said the case was filed now because it's been three years and Gudas and his producers haven't received payment.
Three of the four films that are the subjects of the lawsuit have been completed and distributed. Two — "2001 Maniacs: Field of Screams" and "Lucky" can be seen on Netflix. The title of "When September Ends" was changed to "Dylan's Wake," and was completed and released in a limited release. The title was later changed to "Dead Awake." Distribution rights for the fourth, "Underground" are for sale, Campbell said.
Thompson did say Monday that the state had reasons for not paying the tax credits.
"For three of the films, 'When September Ends,' 'Lucky,' and 'Field of Screams,' the producers never submitted the documentation the Iowa Department of Economic Development required for the producers to qualify for any state tax credits," Thompson said.
For the fourth film, the state found the producer, Harel Goldstein, of California had created false invoices and used them to support expense claims for film tax credits. Goldstein later pleaded guilty to felony fraud and forgery charges.
The state resolved tax credit claims for 15 separate film projects, paying a negotiated amount through its regular administrative process.
In addition to Gudas' civil lawsuit, two others were filed; one was dismissed, a second is pending.