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Filmmaker pleads guilty to tax-credit fraud in Superior Court

| May 17, 2012 | Tax Crimes

A Cape Cod film director was convicted of tax fraud in Massachusetts Superior Court last week. The man illegally obtained $4.7 million in tax credits from the state Department of Revenue for filming two motion pictures set on Cape Cod. He was sentenced to two to three years in state prison and ordered to pay $4.4 million in restitution. He also faces 10 years of probation after his release.

The director had no prior criminal history, accepted responsibility for his actions, and cooperated with the authorities throughout the tax crimes investigation, his lawyer said. The man apologized to the Commonwealth, the Department of Revenue and the court after his sentence was read.

The filmmaker deceived the state by greatly exaggerating the production costs of his two films, including the amount he claimed to have paid his actors. According to our state’s film tax credit incentives, filmmakers can apply for credits equal to 25 percent of their eligible production expenses.

Critics say such high tax breaks are ridiculous while others believe film productions boost local economies and create jobs. Our revenue department awarded $276 million to more than 550 film projects during a four-year period. At least 13 other states and Puerto Rico provide film tax incentives as high as 40 percent when directors use local talent.

The accused is concerned about how he is going to pay his restitution. After his arrest in December he was unable to post his $100,000 bail. He remained in jail for four months until he pleaded guilty and was released, but ordered to wear a monitoring bracelet.

Source: boston.com, “Cape Cod filmmaker Dan Adams gets 2 to 3 years in prison for $4.7 million tax-credit fraud,” Beth Healy, May 10, 2012

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