NEW ORLEANS (WVUE) - The state inspector general says a production company investigated by FOX 8 News may have broken the law, improperly receiving more than $1 million in state film tax credits.
The inspector general released a scathing audit Wednesday on Horizon Entertainment. Horizon claimed producing The Sean Payton Show and a reality TV show on the Saintsations cost them $8.2 million. They received $2.6 million in tax credits approved by the Louisiana Economic Development Department, or LED.
We interviewed several former Horizon employees for our Easy Money investigative series, and they told us the numbers don't add up.
"He just inflated the numbers so he could get more money from the taxpayers than he spent on the whole thing is what it certainly looks like," said John Beyer, a video editor who worked on the shows.
And the state inspector general agrees.
The IG's 12-page audit details $1,403,161 of inflated expenses and $2,059,983 in unsupported expenses - all totaled, $3,463,144 in questionable spending that led to $1,038,943 in tax credits. The inspector general says those credits should never have been issued.
"It's just another example of taxpayer dollars going out the door without any proper accountability," says Inspector General Stephen Street.
Under the state's film tax credit program, Horizon received a 30-percent credit for all money spent in Louisiana. Our Easy Money reports questioned videotape purchases, edit suite rentals, office space and camera rentals. The inspector general's report questions many of the same expenses.
Horizon never agreed to do an on-camera interview, but did respond to the inspector general's findings. A written statement by the company says, "Several ex-Horizon employees who were selectively interviewed by WVUE and later interviewed by OIG are biased against Horizon because they were terminated by Horizon."
That doesn't appear to be true. Beyer, our interview for much of this investigation, says he quit Horizon and wasn't terminated. Two Horizon sources confirm that. And two other former Horizon employees who were key sources say they were not terminated by Horizon at any time.
Horizon also writes, "The financial transactions were fully disclosed to LED," and that the tax credits issued to Horizon were proper.
Street disagrees. "We did a very thorough investigation and all of it's backed up by interviews and by document review and records," he tells us.
Street says Horizon created a false impression that it spent large amounts of money to land these lucrative credits. Horizon moved money back and forth from different bank accounts to create the appearance that the company spent millions.
Horizon had two bank accounts. The IG's investigation revealed Horizon moved $39,000 back and forth between the two accounts, making 263 transfers in one day to create the appearance horizon spent $2.1 million. The investigation concluded that the total "was reached only be repeated deposits and withdrawals of the same money."
"I think that it creates bank records and a paper trail to show that money changed hands," Street says of Horizon. "But as I've said before, that's like taking money from the right pocket and then putting it into the left pocket, and then claiming that that was an expenditure. It's not a fair portrayal of what actually occurred."
As the activity occurred almost six years ago, it's too late for the federal government to consider this case. But the state inspector general says he's forwarded the report to the East Baton Rouge Parish district attorney, who will now determine if there's enough evidence and enough time to prosecute a case.
The Saints organization received none of the tax credits in question. Horizon worked out of WVUE production facilities in New Orleans while the two shows were in production.
In its statement Horizon puts a lot of the blame on LED, saying that department's officials approved the credits and knew of all of the transactions, including the money going back and forth between accounts.
While the state asked the IG to investigate the matter, LED itself hasn't told us yet whether they will try to recoup money from Horizon.