Fate of film office chief in jury's hands

by Rod Boshart/Cedar Rapids Gazette

DES MOINES – A state prosecutor Wednesday painted Tom Wheeler as a low-level manager with an inflated sense of importance who conspired with crooked filmmakers to defraud Iowa taxpayers while his attorney charged prosecutors with engaging in deception by making him the scapegoat for an ill-conceived film tax credit program riddled with problems.

The final chapter in the former Iowa Film Office director’s saga will be written by a Polk County jury of nine women and three men who began deliberating Wheeler’s fate Wednesday afternoon on charges of felony misconduct in office, first-degree fraudulent practices, and conspiracy. Wheeler, 42, of Indianola, pleaded not guilty to all nine counts brought against him.

During closing arguments, Iowa Deputy Attorney General Thomas H. Miller said Wheeler used his position as an insider to aid and abet at least six filmmakers who allegedly stole millions of dollars in tax credits from the state.

He also contended that Wheeler -- as “one of the very most important men as manager of the film office offering the most generous film incentive in the United States” -- assisted filmmakers by knowingly altering and substituting public documents, as well as knowingly approving false and inflated expenses submitted to his one-man office.

“But for his willful blindness, but for his winking and nodding and approving of all of these frauds, the state of Iowa wouldn’t have lost any money,” Miller told jurors.

The prosecutor said the defense was attempting to offer “ignorance” an excuse for Wheeler’s actions, but he pointed to inflated rental charges of hundreds of dollars for step ladders and push brooms listed in expense forms that the film office manager approved for tax credits in instructing jurors to “bring your common sense with you when you go back in the jury room.”

However, defense attorney Angela Campbell urged jurors to consider the number of witnesses for both sides who vouched for Wheeler’s honesty and good character in sorting through the prosecution’s “shotgun approach” of taking things out of context, creating “all sorts of red herrings” and using terms like “crooks” to lump him into a “kitchen sink” conspiracy with people who were submitting the documents in question.

“It’s hard to defend yourself against an onslaught of mudslinging,” Campbell told jurors in her closing statement in a trial in its third week.

Wheeler and five other people in the state Department of Economic Development lost their jobs when an unfolding scandal triggered by the purchase of luxury vehicles deemed eligible for tax credits prompted former Gov. Chet Culver to suspend the program and request a probe by the state auditor and attorney general after an internal audit raised concerns about lax oversight, mismanagement, inadequate documentation of expenditures, and payments for questionable in-kind services.

Wheeler was hired in 2004 primarily for marketing and promotional duties, but his duties and the demands on his office exploded in 2007 when Iowa began providing a 25 percent tax credit for production expenditures made in Iowa and a 25 percent tax credit for investors for projects that spent at least $100,000 in Iowa.

He testified that he did not have adequate training, contract and accounting expertise, staff or resources to handle the “tsunami wave” of requests for information by interested filmmakers that overwhelmed his office.

A state audit released in October 2010 detailed $25.6 million in tax credits allegedly issued improperly to film projects. Nearly $32 million worth of tax credits were granted to 22 film companies, and State Auditor David Vaudt said he was surprised to find that about 80 percent of the claims involved payments for expenditures where there was no proof or inadequate documentation.

Campbell said Wheeler relied on the direction from state Department of Revenue and DED officials to administer the tax-credit program and approved the vehicle purchases because he was told they were qualified expenditures under the circumstances in which they were used.

While he may have been naïve at times, he did not engage in criminal activity and the state failed to prove he committed knowing and intentional fraud.

“Tom Wheeler tried to fix the problem, but he was fired before he could do it,” she said. “He did what he thought was his job and he did it to the best of his ability.”

She portrayed Wheeler as “an over-worked, under-qualified person put into a position he should have never been put into without the support he should have been given” who kept his superiors informed and maintained a paper trail of email and documentation of his film office dealings.

“That’s not hiding, that’s not deception, that’s not fraud,” Campbell said.

However, Miller said Wheeler intentionally withheld information from his bosses – including the criminal background of a California filmmaker who signed an Iowa film tax-credit contract -- and at times helped filmmakers manipulate Iowa’s incentive program to their advantage as the “man on the inside” who would “turn a blind eye” to inflated expense claims or sponsorship values that a reasonable person would have challenged.

By Roth & Company, PC Tax Update Blog

Roth & Company, PC Tax Update Blog

Teaching a lesson in loyalty to the bureaucracy
August 31, 2011

Former film office Director was on the stand yesterday in his trial on Felony charges of official misconduct. This exchange reported in The Des Moines Register is an eye-opener:

Wheeler testified that he spent long days at the office in 2008 and 2009, frequently took film calls at his home and even fielded emails during his father’s funeral.

"Why would you do that?" defense attorney Angela Campbell asked.

"Because I was on call 24-7, 365, and I was a loyal servant to the state," Wheeler responded.

That, of course, would be the state that is trying to put him in jail for a program that was ill-conceived, badly drafted, and put in the charge of a guy who was hired to sell Iowa to the film industry, not run an enormous spending program with almost no guidance, oversight or staff.

While Mr. Wheeler didn't exactly cover himself with glory in administering this pinata for Hollywood, it's hard to see where it was corruption, rather than ineptitude. Even the prosecution has presented no evidence that Mr. Wheeler got any personal benefit. They want to put him in jail. Meanwhile, his immediate supervisor, the officials in other departments who green-lighted some of the worst abuses, the 143 legislators who passed a law with no definitions, limits, controls or funding, and the Governor who signed the bill and who has ultimate responsibility for its administration, skip away without consequence.

Closing arguments are set for today.

I Think Tom Wheeler Is A Good Man Deserving Acquittal

August 30, 2011 At the Wheeler Trial

I went with fellow actor Jay Villwock to the Tom Wheeler trial today, where we observed most of the afternoon proceedings in which Tom took the stand and faced his attorney, Angela Campbell, as well as the prosecutor, Thomas H. Miller.

My account of today's courtroom action is a series of small paragraphs and isolated sentences. Sorry, but the events today were chopped up and assorted, difficult for me to compose in large easy-to-digest chunks. Here you go.....

Tom's brothers Kent and David were present, as was their mother and Tom's girlfriend.

The jury consists of only three men, with the remaining nine jurors being women, which I find interesting because of the fact that Tom's lawyer is also a female. Why is this of interest? Well, I guess I'm hoping the jurors will find the lawyer for the defense easier to relate to.

Okay, enough of that. Now back to the trial.

Tom was asked about the producer of "The Underground", a Mr. Goldstein, and why he would have changed his name to Gold. Tom theorized that it was because Mr. Goldstein feared that some Iowans would have felt uneasy dealing with a jewish person. Mr. Goldstein had been convicted of a felony, of which Tom knew nothing when dealing with his tax incentive application.

The topic of the Range Rover came up and Tom said the "South Dakota" producers said the car would be used to transfer personnel, such as the top stars, and also for camera work. He said he did not know of any fraud involving this car.

As for the producers of "Children of the Corn", where a Mercedes car was purchased, Tom was told it would be used to transport talent. He said the state law did not restrict the use of a vehicle and therefore he did not see a violation regarding the car purchase.

He said people were mad about these car purchases and that he made efforts to modify the law but legislating changes requires a cumbersome and lengthy process and nobody took necessary action to change the law.

Tom said he wanted to keep a solid paper trail. At today's proceeding the prosecutor introduced several emails in which Tom communicated with various movie producers, which proves he did in fact maintain a good paper trail.

He said he felt he was organized but that he "had a lot to juggle". Tom said that in the summer of 2009, the IDED "rifled through everything and made a wreck" of his files. He said he worked "fifty to sixty hours a week" and was not paid for overtime. Tom said he even took care of IFO emails at his father's funeral. When asked why he said, "Because I was a loyal servant of the state."

When someone suggested that Tom's job was glamorous he pointed out that he never even met Adrian Brody, Forest Whitaker(sp) or other such actors

He wanted and needed help to handle the massive amount of paperwork but was refused by his IDED superiors.

He said he never moved a signature from one contract to another, and that things were always changing with films, requiring him to update data on contracts. It was clear to all of the IDED folks that film costs were not based on contracted amounts and that much was spent for movies at the end of each project.

Background checks were added to his duties, but his plate was overflowing and he would not be able to do this without additional help. He communicated on a regular basis but found that his superiors did not keep their appointments and that there was no open door policy for addressing problems.

Tom said he did raise questions when problems arose and there were no guidebooks to study for matters relating to the department of revenue, attorney general, and nobody clearly stated how to specifically and properly run the IFO in order to satisfy the state.

There was a huge ongoing surge of producers establishing a movie industry here, with the promise of providing jobs for generations of Iowans. 20th Century Fox, and CBS Films were among many studios who were on the verge of establishing roots here.

Prosecutor Miller posed a series of questions, most of which concerning the two luxury cars issue.Miller asked if Tom's hands were on "the pursestrings" of movie money, to which Tom said, "No, I just checked paperwork" and "conducted spot audits and cross-checking". He believed cross-checking would be a good way to discover errors and was a good overall safeguard. He said there was nobody assigned to assist him.

Producer Isaccson (sp) exploited a loophole in the film tax incentives laws, but the law did not restrict the purchase of cars. This was a legislative problem, not fixable without the involvement of Iowa lawmakers.

I feel Tom Wheeler did not knowingly commit fraud or conspiracy and that his superiors flatly refused to throw him a lifebuoy as he bobbed in heavy waves of thousands of pages of paperwork, impossible for one man to manage. Tom strikes me as being a very honest man and I hope he is acquitted of all charges and will be able to move on with his life.

Wheeler: I made mistakes, but none were criminal

Former Film Office director again takes stand in his own defense

by Rod Boshart/Cedar Rapids Gazette

Former Iowa Film Office manager Thomas Wheeler admitted Tuesday that he made mistakes overseeing the state’s film tax-credit program, but none were done with criminal intent or to help others commit fraud.

During his second day of testifying in his own defense at his criminal trial, Wheeler said the missteps in administering what had become the nation’s most lucrative film incentive largely were rooted in:

• The new incentive law’s many ambiguities.
• A number of evolving interpretations being made by state tax and economic development officials over what expenses and in-kind services were eligible for investors and producers seeking transferrable state tax credits.

The former state employee said the “tsunami wave” of contacts that flooded his office once Iowa began providing a 25 percent tax credit for production expenditures made in Iowa, plus a 25 percent tax credit for investors for projects that spent at least $100,000 in Iowa coincided with other challenges that engulfed the state Department of Economic Development. Those challenges included the state’s worst flooding disaster, the national recession and state budget cuts that all stretched DED resources thin.

Wheeler, 42, of Indianola, is being tried in Polk County District Court on charges of felony misconduct in office, first-degree fraudulent practices, and conspiracy for his role as film office manager from 2004 until September 2009 when an unfolding scandal triggered by the purchase of luxury vehicles deemed eligible for tax credits prompted former Gov. Chet Culver to suspend the program. He has pleaded not guilty to all the criminal charges filed against him.

Wheeler and five other people lost their jobs in the economic development agency when an internal audit raised concerns about lax oversight, inadequate documentation of expenditures, payments for questionable in-kind services, and credits that had been issued for the purchase of luxury vehicles that were later taken to California for personal use.

Wheeler said throughout his time at the film office he followed the law to the best of his ability even though the details were murky at times and “the variables were literally infinite.” He said his firing was unexpected. “When I was charged, it was a surprise,” he said.

Under questioning by his defense attorney, Angela Campbell, about mistake he made, Wheeler said: “That’s why we’re here in part, I made a lot of mistakes.”

Asked by Campbell: “Did you ever intend to make a mistake that would cause people to be able to commit fraud?”

“Absolutely not,” Wheeler replied.

State prosecutors were expected to begin their cross examination of Wheeler on Tuesday, and the jury of nine women and three men was expected to get the case later this week.

Mike Tramontina - Not the first time he's left a mess behind.

Here is a very interesting item that was in the September 24, 2009 issue of Des Moines CityView in their "Civic Skinny" column. Apparently what happened with the Film Office wasn't the first mess that Mike Tramontina had left behind and escaped from.

What it said:

"The hurried “resignation” of Iowa Economic Development Director Mike Tramontina surprised folks who have watched his career. A lifelong bureaucrat, Tramontina had a survivor’s instinct almost unparalleled in the state. The single biggest screw-up in the not-very-many-screwups administration of Tom Vilsack was the hiring — for millions of dollars — of A.T. Kearney to find efficiencies in state government. It was ill-conceived and badly implemented, and it accomplished little if anything. Tramontina, who was then running the Iowa Department of Management, was “driving that bus,” in the words of one guy who followed it closely, but when the shooting and the shouting were over, it was Mollie Anderson of the Department of Administrative Services who eventually left.

Most folks assumed Tram would leave at the end of the Vilsack reign — the Culver people have little use for anyone associated with Vilsack — so it was a surprise when Tramontina ended up with the plum $145,000-a-year job at Economic Development. He wasn’t the first choice — UNI’s Randy Pilkington, and perhaps others, were sounded out — but he got the job, and Culver called him “a proven leader.” It was under Tramontina’s watch that the IDED was roundly criticized by the state auditor for failing to monitor, verify and assess a jobs-training program the community colleges run to help lure and keep businesses. It was fraught with, at best, sloppiness — at worst, negligence. But he sidestepped that one, too. Last week, the nimble Tramontina did his best to shift blame in the mess over film tax credits that led to his resignation late Friday. On Wednesday, he sent a cover-your-ass memo to his board and the Governor’s office noting that he had discovered these irregularities and laying out his plan of action. But it was too little, too late. By Friday evening, he was toast.

The lesson, says one pol: “If you’re going to fuck something up, don’t do it in an election year.” Even if you’re Mike Tramontina."

Apparently Tom Wheeler isn't the guy that prosecutors should really be going after. Tramontina is.

Lee Rood's Article In Des Moines Register Today

Wheeler: Agency denied help for program
He said he knew he needed more resources, but was turned down.

Written by
LEE ROOD

Iowa’s former film chief quickly realized he needed help running the new film program passed by legislators in 2007, but a state agency head told him he wasn’t getting any, he testified Monday.

Tom Wheeler — facing charges of felony misconduct, first-degree fraudulent practicies and first-degree conspiracy — took the witness stand in his own defense.

His testimony signals that the trial of the only state official charged in the film tax-credit scandal is nearing an end. The prosecution is expected to cross-examine Wheeler today, and the three-week trial could go to a jury later this week.

Wheeler, who was hired at the Iowa Department of Economic Development in 2004 and fired after abuses of the program were discovered in 2009, said everything about his job changed after a new tax-credit program for filmmaking took effect in the summer of 2007.

Thanks to the incentive program, filmmaking in Iowa skyrocketed from 2007 through 2009. The film industry brought $82 million in new economic activity to the metro area during that time period, according to earlier testimony in the case.

But Wheeler testified Monday that not only were there no rules and no template for how the unique program should work, no one at Iowa’s Department of Economic Development had any experience with film incentive programs.

“There were tremendous problems from beginning to end,” Wheeler told the jury.

Wheeler testified that former Department of Economic Development Chief Mike Tramontina flatly refused to provide the new program extra resources when he came and asked for help in the fall of 2007.

“I said, ‘I think this program is going to pick up some speed. I’m already up to my shoulders,’ ” Wheeler said. “… He said, ‘You’re not getting any help.’ ”

Tramontina testified last week that he could not recall the specifics of conversations he had with Wheeler.

Prosecutors are trying to prove that Wheeler not only mismanaged the film office, but that he intended to aid others in defrauding the state.

A state audit has shown that $26 million of nearly $32 million in tax credits were awarded improperly by the film office, either because the productions did not qualify for the credits or because documentation was incomplete.

Wheeler testified that Tramontina seemed to think his job was still primarily marketing the state to filmmakers after the tax-credit program began. All state agencies were undergoing budget cuts at the time, and “the department was at its limit,” Wheeler said.

But Wheeler said the one-man film office quickly fell behind. He was building new forms for contracts and applications, fielding calls from more filmmakers and accumulating so much data on projects, it overwhelmed the Department of Economic Development’s server.

Wheeler said he had to buy an external hard drive at his own expense because he was told the department had no money to spend on new equipment.

Wheeler said he began to run the program through trial and error, eventually coming up with a system for tracking every contact with filmmakers and every film.

His computer files, which he examined Monday with defense attorney Angela Campbell for the jury, suggested he was far more organized and open than auditors and prosecutors have suggested.

For example, Wheeler maintained a massive spreadsheet, which he said he presented regularly to his bosses. The spreadsheet showed more than 30 details about each project that came across his desk.

Among other things, he kept detailed information of when contracts changed, where they were in the awards process, estimated tax-credit awards, start and finish dates, and budgets.

Campbell and Wheeler reviewed the information because prosecutors alleged Wheeler helped filmmakers dramatically inflate the budget of the movie “The Scientist,” a film by Polynation Pictures, without his supervisors knowing.

“So it is not accurate to say you weren’t telling them about the increases in the budgets?” Campbell asked.

“Not accurate at all,” Wheeler said.

Wheeler said he did everything from gofer work on animated films to landscaping to film processing at Walgreens before he was hired at the Iowa Film Office in 2004.

He said he had no training in contracts, drafting administrative rules, accounting or the law.

UPDATE: Wheeler defends himself against criminal charges

by Rod Boshart/Cedar Rapids Gazette

DES MOINES – Former Iowa Film Office manager Thomas Wheeler testified Monday he was excited about the prospects of managing the state’s new competitive film tax credit program in 2007, but soon was overwhelmed by the “mind-boggling” complexities of contract and tax laws for which he lacked adequate training, help and expertise.
“I thought I knew what I was getting into,” Wheeler told a Polk County jury of nine women and three men during his trial on felony misconduct in office, first-degree fraudulent practices, and conspiracy charges. “In hindsight, it’s clear that I had no idea.”
Wheeler, 42, of Indianola, who has pleaded not guilty to all the charges for which he’s being tried, said he was hired in January 2004 for a film office job that paid $50,000 a year and mostly entailed marketing the state to prospective filmmakers and providing customer service within the state’s tourism division – duties for which he felt qualified and capable of providing.
However, things changed when state lawmakers approved a new state film tax-credit program in 2007 within the state Department of Economic Development that provided a 25 percent tax credit for production expenditures made in Iowa and a 25 percent tax credit for investors for projects that spent at least $100,000 in Iowa.
“It seemed pretty straight forward at the time. It turned out to be anything but straight forward. I was terribly wrong,” Wheeler said. “There were tremendous problems and challenges that arose the minute it came into existence until the end.”
For starters, the new law was retroactive to cover some film projects that already were in the works or production had been completed. Also, he said a number of areas of the new law dealing with terms like qualified expenditures, residency, Iowa-based businesses and investors were not clearly defined and it was difficult to find reliable people to clear up the ambiguities.
“At the time, did anybody tell you ‘you’ve got it all wrong?’” in administering the program or interpreting the statute or rules, asked defense attorney Angela Campbell.
No,” Wheeler replied.
Also, Wheeler said he was hit by a “flood” of requests for information and explanations that grew into “tens and tens of thousands” of emails and contract details that exceeded his allotment of DED server space and forced him to spend his own money for computer backup to accommodate the voluminous documentation.
“The program never stopped evolving and the questions never stopped coming in. Even after I was fired there were new questions coming in,” he said.
Campbell produced boxes of receipts from film projects that applied for Iowa film tax credits and phone logs that Wheeler compiled to refute prosecution claims that he withheld documents from his supervisors or engaged in secrecy during his stint as film office manager.
Prosecutors allege that Wheeler, who was fired in September 2009 after an independent audit revealed alleged abuse and mismanagement of the state’s film tax-credit program, acted as “an inside man” to help filmmakers fleece the Iowa treasury for millions of dollars by knowingly altering and substituting public documents and approving false and inflated expenses submitted to his office.
The defense has portrayed Wheeler as a low-level manager with no expertise in the movie industry who was put in charge of an ill-conceived but lucrative new state tax incentive program created by the Legislature to attract filmmakers that “spiraled into a giant mess” due to inadequate staffing, training, direction, oversight and clearly defined program perimeters.
“There were just so many hats to wear. Is there anyone else who could wear some of those hats?” Wheeler said.
The former film office manager said he recalled telling then-DED Director Mike Tramontina that the program was picking up and he needed more staff to handle the crush of requests and documents.
“He cut me off. He said you’re not getting any help. That’s it. I thought that was an unusual thing for him to say,” Wheeler testified.
He said the DED director said the film program was “supposed to be fun. You’re not economic development. You’re fun. You just need to promote this stuff.”
However, former Gov. Chet Culver suspended the film-tax credit program in September 2009 after DED employees raised concerns that credits were being issued for the purchase of luxury vehicles that were later taken to California for personal use. After the scandal broke, six people lost their jobs within the economic development agency, including Wheeler.
A state audit released in October 2010 detailed $25.6 million in tax credits allegedly issued improperly to film projects. Nearly $32 million worth of tax credits were granted to 22 film companies, and State Auditor David Vaudt said he was surprised to find that about 80 percent of the claims involved payments for expenditures where there was no proof or inadequate documentation.
Wheeler was slated to continue testifying in his own defense and answering prosecutors cross examination Tuesday in a trial that began Aug. 15 and was expected to go to the jury later this week. District Judge Douglas Staskal excused a woman juror due to illness on Monday and replaced her with one of two women who are serving as alternate jurors.

Another Monday at the Tom Wheeler Trial or "Tom Goes to Wonderland"

I used my day off again to attend the Tom Wheeler trial. This time I went for the whole day. In the morning I went with Jay Villwock and for the afternoon portion I went by myself.

A lot of what was revealed in today's session was very capably reported by KCCI-TV on their website in this story:

Film Office Director Talks Experience, Budgets, More
http://www.kcci.com/news/28961656/detail.html

There is a very good video clip included that give a good sense of the sort of support that Tom was receiving from the head of the Iowa Department of Economic Development, Mike Tramontina. (Gene Hamilton posted the text of it in the previous post below.)

I will attempt to fill in things I saw that didn't get reported.

When I arrived the first witness for the defense was just finishing up. She was part of Dennis Brouse's Changing Horses Productions from what I could gather but I didn't catch any of her testimony.

The next witness on the stand was Kristina Swanson who had worked for producer Bruce Elgin primarily as a Unit Production Manager. I saw her many times when I worked on the film "Splatter". The prosecution asked about the use of "deal memos" and she said that the use of those is pretty standard. He asked her about her salaries for "The Offering" and "Splatter" and again didn't unearth anything out of the ordinary. I suppose he was hoping that the salaries would be uncommonly high for what the fair market rate would be. She said, if anything, they were on the low side. He confronted her with the fact that the state credited the amount of $77,000 while her actual pay was $28,000. She responded that she was surprised and saddened by this. All in all it was great testimony - for Bruce Elgin's trial. However, since it was instead Tom Wheeler's trial it was a "dollar short and a day late". (When is the prosecution going to realize whose trial it is?)

Then it was James Watson, the Council Bluffs CPA who worked for Wendy Runge during the production of "The Scientist". All I got from the testimony (I was pretty tired so I may have missed something) was that there had been no direct communication with Tom Wheeler. All of the communication had been via email to Tom and to Jim McNulty about how the Film Credits worked.

Finally Tom Wheeler took the stand. Defense attorney, Angela Campbell began by making it clear to Tom that he wasn't required to take the stand and by doing so he could be cross-examined by the prosecution. Wheeler made it clear that he was aware of that and that he didn't have anything to hide.

Questioning began with questions about his background. I found out (there's more detail in that KCCI news story linked to above, by the way) that he grew up in Norwalk, and started off when he went to college trying to learn Engineering but found he wasn't up to that so switched to a liberal arts education finally having a double major in Sociology and Religion. He took a graduate level creative writing class and participated in a fellow student's independent film as an actor. Upon graduating he moved to the southwest and was able to get a Production Assistant job at Fox Animation, 20th Century Fox's feature animation unit. He was able to move up some and ended up in the Editorial Department as a Departmental Assistant reading soundtracks and doing a few other miscellaneous duties. He lost that job when the division was closed. He moved to San Francisco with many of the other people who had worked there and tried to get work with some of the other studios such as Pixar and Warner Brothers but was unable to break in. He was able to get some work from an event company but ultimately couldn't afford to live in the expensive bay area. He ended up packing up and moving back to Iowa. After a few small jobs (motorcycle shop, landscaping, photo department at Walgreens) he found out about the job at the Iowa Film Office being available and got it. It was a substantial increase in pay.

What got established then was what the job was when he started and how it changed once the film incentive bill was passed. The job described to him was a marketing and customer service job which he was able to do. There was no orientation given to him. The closest to training he was given was the employee handbook. In it he found about the prohibition of state employees receiving gifts and he abided by it, even if it did create some awkward moments. The only other information he got was from previous Film Office manager, Steve Schott and what his immediate supervisor could provide. He was basically on his own for most of learning what the job entailed.

His responsibilities involved maintaining the Production Guide, answering questions via phone and email from film people and the general public, putting productions in contact with relevant Iowa people, and working on a location database. When he started major feature productions came to Iowa about once every two years.

The Film Office had a membership in the IMPA (Iowa Motion Picture Association) and the fee was paid for by the state. Tom joined the Iowa Scriptwriters Alliance (ISA) which he paid for himself. The Film Office was part of the International Association of Film Commissioners (which Tom was expected to participate in). He represented the Film Office in visits to IMPA, as well as visits to the Iowa Digital Filmmakers Guild (IDFG) in Iowa City and informed members of things going on in the state and worked to try to get them involved. He attended annual conventions of the Film Commissioners representing Iowa and promoting it as a place to do production.

Then the film incentives came into being...

Having talked to film commission people in other states and seeing what was going on, he was all for some sort of film incentive in Iowa since it would promote what he understood the Film Office's mission, indeed the mission of the whole Iowa Department of Economic Development, - the spending of money in Iowa. He was finding it difficult to compete with other states because they had film incentives and Iowa did not. Opportunities were being lost. However he wasn't the one to bring it up with the legislature. IMPA and other production entities in Iowa were the ones to approach the legislature about this. Tom Wheeler's role in all this was research for whoever asked for it. He looked up what other states were doing, what worked or didn't, what the incentives were, and how various programs were set up.

There were two failed attempts to pass film incentive legislation before it finally passed in 2006.

When Tom Wheeler joined the Film Office it was put in with Tourism. Later, once the film incentives were in place, it became apparent that Tourism wasn't up to the task of handling the business needs of film productions. Wheeler had a bit of a struggle getting the IDED to move it in with business but finally accomplished it.

Tom Wheeler testified that most of the learning of his job was by trial and error. This did not change with the passing of the film incentives. The film incentive bill did not provide any additional funding to provide for the expenses of administering such a program. The budget for the Iowa Film Office did not increase after the Film Incentives passed. In fact the budget was cut drastically.

Tom Wheeler testified that he had no training in either law or accounting. He entered the job with no experience with film tax incentives (in fact, these were new to everyone). He had never seen a film budget nor had any understanding of them. He testified that he relied heavily on the expertise of others within the IDED and other areas of state government such as Revenue and got as much help as he was able but many would only go so far and left him on his own after a certain point. He testified that at meetings about interpreting the film incentive statutes he was the least informed of everyone. He testified that he had only a "layman's understanding" of much of what he was confronted with.

When the film incentives passed, one of the things about them is that there were retroactive. There was no time provided to develop the proper materials (forms, applications, etc.) after they were passed and consequently for some films already shot within where the incentives were retroactive to the materials had to be improvised. Tom Wheeler had some help developing the rules and forms but much of it was left to him.

After the incentives passed his phone calls and emails increased exponentially. He was only given a limited amount of space on IDED servers to store Film Office files and this was soon exceeded. He at one point had to purchase with his own money an external hard drive to back up his files. It had a half terabyte capacity and that wasn't even enough. His email inbox, in the screenshot shown at the trial, showed over 11,000 messages.

It was established during testimony that Tom Wheeler made a great effort to keep records on everything and was constantly developing systems to keep track of the ever mounting volume of data. And this was while everything kept being changed. The content of applications were constantly updated as new information had to be adjusted for. Contracts on the other hand were not to changed more than once a year. The reason given by those who were involved with contracts at IDED was so that all the changes could be made at once. Of course, if you look at things, this was a problem because if something was wrong it would have to wait up to a year to be corrected. (The cars would be such an item.)

Tom Wheeler testified that it wasn't long before he went into reactive mode - that is, reacting to the current crisis rather than planning ahead - putting out fires, in other words. He testified that interpreting the statutes and administering the incentive program seemed straight forward at the beginning but turned out to be anything but when he actually did it. The program never stopped evolving even after he was fired.

The last of the testimony was truly breathtaking - a virtual descent into Wonderland. As mentioned before everything seemed straight forward at first as far as how the law was written and how the program was to be administered. That is until you get lawyers involved with it. The trouble started with "Peacock" with the term "Iowa resident" (if I remember what I heard correctly. The lawyers for that film told Tom Wheeler that programs in other states were interpreting the meaning of the term differently than how Tom understood it and was presenting it to them. Tom described how he had literally run to all of his various supervisors and told them of his error and how he had said they could do what they wished with him (fire him) if they needed to but that they needed to correct the problem first. The problem was one that could have cost the states millions in a lawsuit. During this part of the testimony it was mentioned that the terms "Iowa based company", "resident", "residency", "investor", "financial", "participant", "project", "qualified expenditure", - even "tax payer" were not defined in the law and were open to differing interpretations. Leave it to the lawyers! Tom Wheeler was definitely in over his head in all this. Who wouldn't be in such a crazy "Alice in Wonderland" situation?

From KCCI TV-8 In Des Moines

DES MOINES, Iowa -- The former director of the Iowa Film Office is taking the witness stand in his trial in a Polk County courtroom Monday.

Former Director Tom Wheeler is on trial, charged with several counts of fraud, misconduct in office and conspiracy. Wheeler has pleaded not guilty to the charges.

Wheeler took the stand at 11 a.m. He said he has a bachelor's degree in Sociology and Religion. He said he hasn't taken accounting or law classes. He did take a graduate level creative writing class.

"I was not a very good student," said Wheeler.

He went on to talk about his job experience before taking the Film Office director's job, including working for a landscaping company, at a Bruegger's store and at a Walgreens in the photo department. He said then he applied for the job at the Iowa Film Office.

He interviewed with Nancy Landis, Mary Lawyer and Mike Blouin. He was offer the job and started working in January 2004.

Wheeler said the job was described to him as a marketing and customer service position. At the time he was hired, he said he was capable and qualified to do the job.

Wheeler said state employees were not allowed to take gifts, food or beverages. Wheeler said he never did.

He was not given any additional training for his job at the Iowa Film Office.

"I thought I knew what I was getting into," said Wheeler.

Wheeler said he answered phone calls and emails about films, maintained a production guide and provided photographs or took photographs of locations for movie shoots.

His salary was $50,000 plus benefits.

He said the position was by far the best job he had ever had -- paywise.

"By and large, I thought I knew what to do on a day-to-day basis," said Wheeler.

Wheeler said he learned how to do things by "trial and error."

Wheeler said his job was evolving on an ongoing basis. Then in 2007 with the passing of film tax credit law, his job changed dramatically.

Wheeler said he never endorsed any business. He would refer filmmakers to the production guide if there was more than one business in a particular category.

"Were you ready for a tax incentive bill to pass?" asked the defense attorney.

"In hindsight, no," said Wheeler.

Wheeler said he had no accounting experience, no history with tax credits, no law experience, no administrative experience and no lobbying experience.

Wheeler said after the film tax credits passed, his budget shrank. Wheeler also said he was denied any additional staff to help him.

He said he sought help to understand the tax credits.

"I was the least experienced person in the room, maybe in the building on that subject," said Wheeler.

Before being hired, he said he had never seen a film budget. He wasn't given any training in film budget accounting. He learned about film accounting from the filmmakers and the people who were developing budgets for films.

He said at first the film tax credit law seemed pretty straight forward.

"I was terribly wrong," Wheeler said.

Wheeler said the law was confusing. He said he did his best to figure it out.

"Did anyone ever tell you had it all wrong?" asked the defense attorney.

"No," Wheeler said.

Wheeler said the tax credit law was also retroactive to Jan. 1, so the demand for the credits was immediate. He said he had no time to establish rules, paperwork or promotions. He received more than 10,000 emails and used Outlook as a file cabinet. He also had hundreds of folders and files on his computer.

Earlier Monday...

Earlier on Monday morning, Kristina Swanson took the stand. She worked on "Splatter" and "The Offering" with Bruce Elgin. She was told she would not be paid until tax credits were cashed.

Her contract for "Splatter" was that she would be paid $28,000 for her work. If the film was sold she would get $148,000. She thought the low number was low. She said the high number was more in line with what she would be paid in Los Angeles.

She said she ended up being paid $28,000 plus reimbursements.

The prosecution said Iowa taxpayers reimbursed Elgin more than $74,000 for Swanson's services.

Swanson said she was surprised to hear the numbers, a little confused and sad.

Her contract for "The Offering" was that she would be paid $11,000 to $55,000 for her work.

The prosecution said Bruce Elgin received $27,500 in taxpayer money to pay her. She received $11,000.

She said if she thought anything wrong was going on, she did not tell Wheeler.

Look for more trial coverage here on KCCI.com and on KCCI-TV.

Thursday Testimony

The defense called four witnesses Thursday, three of whom worked closely with Wheeler in the Department of Economic Development including the man who hired him.

Anthony Gudas, owner of a company that pre-funds state tax incentives for filmmakers, took the stand Thursday morning.

"I thought Tom was honest. I thought he was overwhelmed and probably lacked the experience necessary to run a successful film program," said Gudas. "It also caused, shall I say, earthquakes throughout the industry in the business that I'm in and probably a lot of projects did not get made at first because they were wondering if there would be a domino effect from other states."

Gudas said Iowa's tax credit program was one of the best in the nation, but the legislation was poorly written and the program lacked structure.

He testified that he has more than $8 million in pre-funded tax credits trapped in the state as a result of contracts not being honored after the program was suspended.

He also said he believed Wheeler was overwhelmed but under qualified for the job of director.

Mike Blouin, the man who hired Wheeler for the position agreed with Gudas' testimony when he took the stand later in the day.

Blouin was the director of the Iowa Department of Economic Development then when he hired Wheeler, which was before the Film Tax Credit program was enacted.

"I don't think Tom was experienced or skilled or capable of handling the kind of program that would have been put on if the program had been proposed when I was director. As such, I may not well have even supported it. There was no staff, no budget, no account or legal help added as a result of it," said Blouin.

There will be no testimony Friday. The trial is expected to resume on Monday.

Wednesday Testimony

Wednesday morning, Wheeler's older brother, Steven, continued his testimony. Defense attorney Angela Campbell asked if Steven had seen any fancy cars, boats or anything big purchased by Tom Wheeler.

"Nothing," Steven Wheeler replied.

He was followed by Scott Seyman, who worked with Wheeler at Fox Animation Studios in Phoenix.

Seyman described Wheeler as a "Hard worker, eager to please. Always ready to take on more responsibilities. Just a real go-getter. Kind of a 'Type A' kind of guy."

Former tourisim director for the Iowa Department of Economic Development, Nancy Landess, also provided testimony.

She said Wheeler was hired in a marketing position to promote filming in Iowa. She said that Wheeler had performance goals that he was expected to meet for the number of films he brought to Iowa.

In December 2007, the goal was two films and Landess asked if he had met that goal.

"Would it be fair to say then ma'am that you were trying to encourage Tom Wheeler to increase the number of films that were used in the program?" said Campbell.

"Well certainly that was the goal to increase the number that were using the program," said Landess.

Mike Tramontina served as Director of the Iowa Dept of Economic when Wheeler was in charge of the Iowa Film Office. He took the witness stand on Wednesday morning.

Tramontina said he doubts Wheeler receive training on tax credits as an employee in the tourism department where he worked before joining the film office. He said he was in contact with Wheeler during the entire process and that Wheeler was not doing it by himself.

Campbell asked if Wheeler was seeking assistance and guidance from his supervisors.

Tramontina said Wheeler was on an irregular basis. Tom was not as communicative with his supervisors as most employees are and he probably asked fewer questions of his supervisors, fewer things came up to me than typically other people did, said Tramontina.

Tramontina said it was the general counsel and office of the attorney general's job to interpret law and statutes for the film office.
[Runge on witness stand.]
Runge on witness stand.

Minnesota firmmaker Wendy Runge took the stand in the afternoon. Runge pleaded guilty to first-degree fraudulent practice concerning the film projects "Run" and "Forever." She has been cooperating with the Film Office investigation.

Runge became emotional when she talked about her guilty plea and her pending appeal. She said she never had an agreement with Wheeler to defraud the state.

Runge said that she believed Wheeler did the job to the best of his ability.

She said Wheeler often said he had to ask, had to find out what the policy was and that he would get back to her, so often he would not answer directly and then get back at some point and time or maybe an answer never came from his superiors.

Read more: http://www.kcci.com/news/28961656/detail.html#ixzz1WSKMo8z5

Note From David B. Wheeler

Film Friends - It wasn't reported in the news but late Thursday afternoon the former Director of the Legal and Compliance Department and team for IDED, Melaine Johnson, testified for the defense. The legal and compliance department's role is to assist all programs at IDED to manage contracts (legal), visiting film sets/filming sites to ensure equipment is being used (compliance) as registration/co...ntracts provided, the final amounts of tax credit awards are correct (legal) and the obligations made by movie producers are met (compliance). Much of her knowledge is attorney client privileged but it was very significant that she testified when she suggested IDED Legal and Compliance Department (with more than 15 staff) begin to provide their services and expertise for the Film Office in 2008, Director of IDED Mike Tramontina told her "No." Why wasn't this reported in the press? The Director of the IDED told the legal and compliance department no to assisting the Iowa Film Office. A very significant statement by the IDED's former lawyer and clearly part of the problem with the IFO. Melaine was unfairly thrown under the bus and fired as well.

Indiewire.com Post by Ted Hope

Where The Tax Credits For Film Are In America These Days

Tax credits and subsidies for the film business are job stimulus. As a producer asked to ALWAYS squeeze a buck, I simply won’t shoot my films where the tax credits are not. Luckily I live in the wise and wonderful state of New York, that has one of the best tax subsidies for film and television any where in the world, not to mention the BEST talent pool in the universe too.

But it’s not the only place to go. The Incentives Office offers a clear MUST READ review of the state of the union of where to go for how much.

I received this email from The Incentives Office today. You should visit their site to receive such emails yourself.

Although many states have curtailed or terminated their incentives programs, others have expanded or enhanced their programs. There is still a substantial amount of money available - to find it:

THE INCENTIVES OFFICE TELLS YOU WHERE TO GO…

Alabama - $6 million available now, with new funds will be available on October 1st. $10 million annual cap.

Alaska - $50 million is available. Alaska has no caps on talent or projects, but requires a CPA audit to sell their 30-44% credits.

Colorado - $500,000 remains for their 10% rebate.

Connecticut - no annual cap. Regulations have tightened up for this (up to) 30% transferable credit.

Florida - (film only - see below for television). Only Florida resident cast and crew qualify, plus FL goods and services.

Georgia - 20% transferable credit, plus 10% uplift for logo (totaling 30%), requires audit/tax return. New sound stages, lots of post facilities. No annual ceiling.

Hawaii - refundable credit of 15% to 20%, requires a tax return. No annual cap.

Illinois - only resident cast and crew qualify, but Chicago is a major production center. Transferable credit of 30%. $100,000 per hire cap, but no annual ceiling.

Indiana - $2.5 million remains for the remainder of this calendar year.

Louisiana - top choice of producers, transferable credit of 30%, plus 5% bump for resident labor. The state redeems credits at 85 cents after CPA audit, or they can be sold (brokered). Many films now in prep or pre-production, so crew is getting strained. No annual ceiling, and three great stages.

Massachusetts - 25% transferable credit; state redeems at 90 cents. No caps or ceiling, and the credits are easy to sell after CPA audit.

Mississippi - a rebate of 25% for materials and non-resident crew, 30% for resident crew, $1M per hire cap. “The Help” was shot in Mississippi. Not a lot of crew depth, but growing. New sound stage in Canton. Costs are low, and the state is eager for production. $18 million is available.

Montana - refundable credit of 9% to 14%. No annual cap.

New Jersey - $14 million available, but half of this will be gone very soon, as earlier shows complete their submissions. 20% transferable credit, sellable after the CPA audit.

New Mexico - annual allocation is $50 million, for this 25% refundable credit which requires a NM tax return. First come, first served; if funds not available when you apply, you wait a year. Depending on total amount, credits awarded over 1, 2 or 3 years.

New York - fiscal year started July 1st, so new funds are available. Below-the-line credit of 30%, payable over 1-3 years with filing of NY state tax returns.

North Carolina - refundable credit of 25%, $1M per hire cap, and project cap of $7.5M. NC requires a tax return. No annual ceiling.

Pennsylvania - Some funds remain, but not for long. However, applications are stil being accepted, as films may drop out of the queue, freeing up funds for new projects.

South Carolina - $14 million currently available for their 10% to 30% rebate.

Texas - The incentive has now been raised to 15% for video game production. The previous rate was 5%. Only Texas resident cast and crew qualify, plus TX goods and services.

Utah - $11 million of fully refundable credits at 25% (with tax return), $3 million for 25% cash rebates (up to $500,000 per project).

West Virginia - $10 million annual cap, $10 million available. 27-31% credits.

AND WHERE NOT TO GO (FOR NOW)

Arizona - program was allowed to sunset, new legislation was defeated.
Florida(television only) - funds for the TV queue are exhausted, and without new legislation, new application will not be accepted.
Missouri - the film commission was not funded.

Idaho - program is not funded.

Iowa - program has been terminated.

Ohio - all funds gone until next fiscal year. Applications are being accepted in case something drops out of the queue

Oklahoma - no funds available until fiscal 2013, which starts July 1, 2012. Applications will be accepted beginning January 1, 2012.

Oregon - a good program, but they are out of funds until July 1, 2012.

Washington - program was allowed to sunset.

Wisconsin - allocation of $500,000 per year.



OTHER LOCATIONS TO CONSIDER
California - all funds allocated. Applications will be accepted starting June 1, 2012, for the next fiscal year, which starts July 1, 2012.
Michigan - Funds currently exhausted, but $25 million via a grant becomes available October 1, 2011. $2M cap per hire, and qualifying rates vary from 30-42%.
Minnesota - $1 million has been allocated; please contact the commissioner for details. Rules and requirements will change - no additional information is available.

Wendol Jarvis, The Man With A Plan

Since the collapse of the film program in Iowa, former IFO director Wendol Jarvis has made countless trips from his home in Kansas City to Des Moines in his tireless effort to redesign the Iowa Film Office and laws relating to film production. This is all on his own dime and time. I know that there have been efforts to control what used to be the Iowa Film Production Guide by various groups and individuals, but I think it should all be under the IFO. There has even been talk of taking control of the IFO by outside entities. I personally have seen Wendol's plans for improving the Iowa Film Office, including charts and graphs and pages of brilliant details and hope Wendol will prevail. His return will mean he will rekindle important and extensive industry connections, which is essential for successfully relaunching the IFO and rebuilding trust and interest on the part of producers.

Tom Wheeler and the "Incompentence" Issue

Two articles in the last two days have brought up the issue of incompetence in regards to Tom Wheeler:

Former IDED Chief: Wheeler wasn't qualified to run incentive program
http://blogs.desmoinesregister.com/dmr/index.php/2011/08/25/former-ided-chief-wheeler-wasnt-qualified-to-run-incentive-program/

Our View - Dialing back the cinematic vision for Iowa
http://www.press-citizen.com/article/20110826/OPINION03/108260303/Our-View-Dialing-back-cinematic-vision-Iowa?odyssey=nav|head

The first is about Mike Blouin, Wheeler's first boss at the IDED being on the stand as a witness and the other is about the Landlocked Film Festival going on at the same time as the trial. Both bring up the idea that Tom Wheeler was incompetent in the most unflattering terms. Let's take a look at the idea of incompetence and see what it really means and see who really deserves the term.

When you look at State Film Tax Credits, it is a relatively new thing - certainly for Iowa. They just have not been around that long and the people who would already have most of the experience are already working - for OTHER states. When something is new, everyone in it is "incompetent". When airplanes were first invented, you can bet that the Wright brothers didn't have a lot of flight hours under their belt when they flew that first plane at Kitty Hawk.

It's well established that Tom Wheeler did not have training in legal contracts or in accounting. There were others at the IDED and in other areas of state government who did and didn't exercise their responsibilities. It is to those people who the term incompetence, in the worst sense, should be applied. And the term should be applied most of all to former governor Chet Culver. From evidence brought up at the trial I could see that Tom Wheeler and to some degree his bosses WERE trying to close the loopholes and make the program work as intended but it was Culver who decided to freeze the whole thing forever instead of allow it to be fixed and decided to turn it into a political football.

I've noticed that there have been a number of people who wish to throw Tom Wheeler under the bus. We've been experiencing this with this trial where the operative word is "persecution" not "prosecution" and I've noticed it in our own film community, such as there is of it. I've heard it mentioned that there was a lot more going on as far as abuses that is being reported with an evil eye directed toward Wheeler. So far at this trial most of the abuses have been those we've known about. At the emergency IMPA meeting I attended there certainly seemed to be a willingness to make Tom Wheeler the sacrificial goat from some parties there. It is just so easy to point fingers when you don't know the facts.

Here is what I believe, given the facts I am aware of:

Tom Wheeler was in over his head and did not have training in legal contracts or in accounting. There was way too much paperwork to sort through, even if he would have had those skills. He wasn't receiving the full support he needed with either additional qualified staffing or support from others in state government. No efforts were made to understand what was going on in his department by those whose responsibility is was to know - his bosses. They just left everything to Tom and forgot about it. ("Ignorance is bliss.") And finally you had someone deciding the fate of the whole thing who knew next to nothing about it and made no effort to - Governor Chester Culver and the results were similar to letting loose a monkey with a hammer into a china shop.

Brother: Tom Wheeler wanted to leave Iowa Film Office

by Rod Boshart/SourceMedia News for the Cedar Rapids Gazette, August 23, 2011, 5:59 pm

DES MOINES – David Wheeler testified Tuesday he advised his younger brother in 2009 to “hold on” as manager of Iowa’s Film Office given the tough economy even though he was swamped with what defense attorneys are portraying as a burgeoning though poorly structured state tax-credit program for which he was not adequately trained or staffed to run.
“I remember specifically writing to him: ‘Tom, it’s tough out there. I would hold on.’ In retrospect, I wish he wouldn’t have taken my advice,” he told a nine-woman, three-man Polk County jury during the second week of Tom Wheeler’s trial on charges of felony misconduct in office, first-degree fraudulent practices and conspiracy related to his work at the film office prior to his September 2009 termination.
David Wheeler, a Norwalk native who now lives in Spruce Pine, N.C., and operates an event management company, said he had several “chats” with his brother about leaving the post in the Iowa Department of Economic Development to pursue other options, but he told Tom to keep his job for the time being due to the tight employment market.
“He was very upset. He was working his tail off,” said David Wheeler, who struggled to keep his composure during about four minutes of testimony. “Our father had died the year before and he never really had time to deal with that, and the bottom fell out and here we are today.”
David Wheeler told jurors he is paying for his brother’s defense because “Tom’s been out of work and he’s got nothing left.”
The testimony came on a day when prosecutors rested their case after showing a brief video of Tom Wheeler making a presentation to California moviemakers touting Iowa’s film tax credit program as half-price filmmaking that provided a 25 percent tax credit for production expenditures made in Iowa and a 25 percent tax credit for investors for projects that spent at least $100,000 in Iowa.
Prosecutors have painted Wheeler as “an inside man” who allegedly helped filmmakers fraudulently obtain state tax credits for bogus claims, inflated expenses and unqualified purchases. They contend he used his position in the film office to help filmmakers improperly benefit from the tax credit program by knowingly altering and substituting public documents, and by knowingly approved false and inflated expenses submitted to the film office.
Defense attorney Angela Campbell worked to dispel that image by calling witnesses who praised the former film office manager as friendly, professional, ethical and honest.
“I felt that he was a straight forward, honest guy,” said Joel Sadilek, a former Cedar Rapids resident who works as a movie line producer in California.
Sadilek said Wheeler never suggested anything untoward to skirt the program’s rules during the two films he worked on in Iowa, but he conceded during cross examination by prosecutors that some of the rental costs approved by Wheeler for other projects that qualified for tax credits were excessive – examples such as $450 to rent two shovels for six weeks or $250 for a rake.
Among the six defense witnesses to testify Tuesday was Donald Schnitker, a special agent of the Iowa Division of Criminal Investigation, who helped probe the film office operations after former Gov. Chet Culver suspended the tax-credit program when allegations surfaced of lax oversight, sloppy bookkeeping and questionable expenditures that included two luxury vehicles that were taken to California for personal use. After the scandal broke, six people lost their jobs within the economic development agency, including Wheeler.
Campbell produced a bank statement seized by DCI agents and asked Schnitker: “Sir, can you tell me where in that exhibit it demonstrates that Mr. Wheeler was getting paid on the side, getting a bribe or otherwise improperly benefitting from the film tax credit program?”
“There’s no evidence of that in this bank account,” Schnitker replied. He also said DCI agents were unable to locate any other bank accounts held by Wheeler.
“So, either Tom Wheeler is so talented at hiding bank accounts or he doesn’t have another one,” Campbell noted.
“Correct,” the DCI agent said.
Campbell also talked about 32 boxes of materials investigators seized from the film office and asked Schnitker: “Sir, can you tell me where in those boxes you found evidence that Mr. Wheeler was improperly benefitting from his work at the Iowa Film Office?”
“Monetarily benefitting?” he replied.
“Yes,” Campbell said.
“That wasn’t found,” Schnitker testified.

Gene & Jay Go To The Wheeler Film Office Trial

Gino and Jay Attend the Tom Wheeler Trial



I am so glad Jay and I went to witness Tom Wheeler's trial today. Tom was glad to see our familiar faces. I know we cheered him up a bit by showing our support. We sat in the front row, next to Tom's brother, David. Behind us sat Tom's wife and Des Moines Register reporter, Lee Rood, who has done an excellent job covering the film crisis since it all began.

Before entering the courtroom at the Polk County Court House, we spoke with Cedar Rapids native, Joel Sadilek, a movie line producer who lives in Burbank, California. Joel's Iowa projects include "Sixteen to Life", and "The Experiment". Joel was on hand to offer testimony for the defense because he said he felt compelled to do so, feeling that Tom is an honest man who was overwhelmed with an impossible amount of work when he was the director of the Iowa Film Office.

Tom's attorney, Angela Campbell, opened her remarks by saying there was not a sliver of evidence that Wheeler ever intended to commit a crime or had any criminal intent to do wrong and asked for an acquittal. The prosecutor, attorney Thomas H. Miller, asserted that Tom "looked the other way" and "aided and abetted fraud and conspiracy".

Wheeler's other attorney, Gordon Fisher, said the Iowa film laws are vague and impossible to understand and interpret.

An Iowa Department of Revenue agent, Jim McNulty, took the stand and briefly answered questions regarding the meaning of "above the line" as it relates to qualifying for tax credits. If I understand it correctly, "above the line" refers to expenses for the director, producer, other top crew and top actors. Anything below the line is where tax credits would apply.

When asked what "line producer" means, Joel Sadilek said a line producer creates budgets based on scripts and manages the film's budget, including money for crew and below the line actors, and more. Joel said movie budgets almost always change, mostly going higher. He said film budgets are generally highly educated guesses. He said a movie's pre-production budget fluctuates.

Sadilek discussed the idea of line producers being bonded, and that being bonded means being worthy of trust by movie investors. Joel said bonding companies are similar to insurance companies who protect investors' money and assure them that a project will be completed no matter what.

During the time movies were being made in Iowa, being bonded was not required of line producers but should have been, according to Sadilek.

When asked what projects he worked on in Iowa, Joel said he produced "Duck Farm Number13" (later changed to "Sixteen to Life", as well as the movie "The Experiment". Wheeler was one of his very first contacts before these movies got under way. He said Wheeler was very friendly and helpful, working far beyond normal state employee hours, and that Wheeler "wanted to do things right". Also, according to Sadilek, Wheeler never asked for a kickback or even a free lunch. The producer said his business is able to continue because of referrals, accounting for 99% of his work.

He pointed out that the union, IATSE, sets rates for film crews and that there are no maximum rates. Also, Joel said that he would know what things would cost, more so than Tom could. "Deal Memos" were discussed by attorney Campbell, and Sadilek said such memos were essential on a film, as they detailed terms of compensation and other important details between a worker and the production company. "Deferred Compensation" was another topic brought up by Ms. Campbell, where actors and workers work for nothing and get paid later.

Joel said a "contingency" is normal and adds ten per cent to a movie's budget and that bonding companies actually require it. Campbell said Wheeler had been criticized for changing a film's budget, to which Joel said budgets are estimates that often do change.

Campbell asked why a movie company would rent rather than buy movie equipment and Joel said it's cheaper to do so, and that by renting expensive equipment you get tech support when equipment breaks. He said in one film they had to go through five Red One cameras and tech support came in very handy.

Attorney Campbell asked Joel is he kept track of all the details in a movie, such as all of the many receipts generated and he said "no way!". She asked if he would be able to manage the receipts of twenty-two films in two years (what Wheeler was expected to do) and the producer said there would simply not possibly be enough time in a day. He said rental houses keep records of "every little screw", implying that such details would require a full staff to scrutinize.

Campbell asked him if Tom ever discussed how to sneak "under the radar", and answered by saying "Tom's not that way and neither am I", adding that Tom talked about how to make film laws in Iowa better.

Prosecutor Miller asked Sadilek how a movie budget comes about and was told that "Movie Magic" software was a popular industry template used by many movie producers. Miller began a series of questions in what I perceived to be his attempt to trip him up, such as what per cent of a movie budget does a camera take, and what about a grip, a gaffer, and more. Sadilek calmly and clearly stated that such answers are difficult without specifying in detail what type of camera, what type of lenses, et cetera.

Miller then asked him is he'd rent a ladder for $900, or a shovel or push broom for big prices. Joel simply said no. When asked if he'd rent or buy a vehicle, Joel said directors sometimes ask for cars if they can be used in a film, such as for a "picture car", a car used in a scene. When asked if buying a luxury car and giving it away would be good Joel said that it would be between the director and producer. Miller then asked if getting five dollars for about two dollars in tax credits is justifiable, Joel said "no".

Campbell discussed how crews can receive higher pay when the number of available crew is thin, owing to many movies being produced in one area. Sadilek said the union, IATSE, negotiates the pay for crews and that costs can go up when available workers are scarce. He said about 50% of a movie budget is for labor and 25-30% is for equipment.

Prosecutor Miller asked Sadilek how much it would cost to rent a "rolling turtle", his obvious attempt to make Joel look stupid. Joel said workers have lots of names within their own trades for various equipment and that he didn't know what such a device was. I just looked it up and it appears that this is a type of C-stand.

Sadilek was brilliant. He sounded very expert in his field and delivered his answers calmly and thoroughly, citing specific details often.

My impression: the prosecution is struggling to make Wheeler look bad and is failing because Wheeler did not gain in any way from all of this. Wheeler's attorneys are equipped with a massive amount of accounts, facts, and figures, all solid ammunition in their arsenal for use in defending a very nice man who got thrown under the bus while his superiors were only fired, without even a hand being slapped.

Gene L. Hamilton, SAG

Interview with Kent Newman from the weekend

There was an interesting interview with Kent Newman, the former president of the Iowa Motion Picture Association (Jay Villwock is the new one) about the current state of Iowa's film industry. It was on KCCI-TV's Newsmakers program.

Here's a link to Part One of the interview:

http://www.youtube.com/watch?v=BDUK1Q6HK7M

and here is link to Part Two:

http://www.youtube.com/watch?v=AyO8MxEzQmA

An Afternoon at the Tom Wheeler Trial

Since I had the day off today, I went down with Jay Villwock to the Tom Wheeler trial. We were able to join the proceedings in the afternoon.

The defense attorney for Tom Wheeler was cross-examining Vince Lintz, the former Deputy Director of the Iowa Department of Economic Development (IDED). From the way the questioning was going, I had guessed that it was the defense's witness, not the prosecutions because for the most part the answers couldn't have been more favorable to the defense's case.

The judge from what I could tell appeared to be the same one who had presided over the Wendy Runge trial. I got a vibe from his of being fair and impartial and that his mind wasn't made up in support of either side. Wheeler's attorney, Angela Campbell, was a very sharp lawyer during what I saw and there was a lot more action during this portion of the trial than I had expected.

The main thing that was established through the questioning was that Wheeler was overwhelmed and overworked and that the people above him at the IDED were in many ways clueless or asleep at the wheel. Many examples of what he had to do, what he was expected to do, and what kind of support he received from his higher-ups was given with thorough, respectful questions asked to confirm things.

Even early in the film program, Tom Wheeler was overwhelmed and needed assistance but was not provided the additional staff that was needed. And then the onslaught happened after a cap was set and a total of 122 applications were submitted to the office. As an example of the number of documents required for just one film to establish expenses three bankers boxes of receipts were brought onto the courtroom floor. And this was just for one average film. It was emphasized how long it would take to go through all of this and how unreasonable it was to expect one person to do this alone. (I recall it took a team at the Attorney General's Office at least 6 months before they could even start to bring any charges.) There was mention of phone voice message boxes being full and unanswered, both for Tom's office and cell phone (that's a LOT of messages). Wheeler's attorney recounted all of the various jobs he was supposed to do and it sounded like enough for at least 3 people to keep busy to me. Practically every question the defense attorney asked about responsibilities ended with the answer "Tom".

There was evidence presented to show that Tom Wheeler was not the "inside man" the prosecution has claimed him to be but rather that he was making strong efforts to tighten the program and to identify and eliminate the loopholes. It was established that Tom tried to work with people to make changes in the rules to make the program run better and that he worked with legislators. It also established that he did not write the law. In fact it was made clear that he had neither the legal training nor the training in accounting that was needed for what he was asked to do.

The issues of the cars was brought up. You remember those, don't you? The Land Rover and the Mercedes - the vehicles that started this whole scandal? It turns out that there was nothing in the law as it had been written nor in the contracts made with producers that excluded these purchases - the ones that got the press and the Culver administration into such an uproar. It was shown beyond a doubt that leasing and purchasing of motor vehicles was allowed under the terms of the law and the contracts. There was no mention of how they were to be used or what kind of vehicles could be purchased. Have you ever wondered why no charges have ever been brought up concerning these vehicles? If you didn't before, you do now.

Toward the end of the session the prosecution tried to counter some of the arguments of the defense. A job review form was exhibited that showed that Tom Wheeler had not filled in an area where it asked if he needed additional staff to do his job. After the evidence in emails from earlier in the program, this omission didn't seem to carry as much weight. Given the work load it certainly seems possible that Wheeler could have either forgotten to fill it in or was at the point of throwing up his hands and not bothering because of the futility of asking. That is at least my impression.

I'm sure I've probably have left some things out from the afternoon's proceedings but that's the gist of a lot of it. Tom Wheeler's trial is set for three weeks and this is the second week. I'll be off work again next Monday and will try to attend and see what I can give as an eye witness report.

-Dave

Crap Should Flow UPHILL

When I saw the latest IFO trial report on TV last night and saw one of the former IDED big shots testifying I got pissed because I believe HE and others are at fault for not coming to Wheeler's aid when he needed it. And pissed, too, that those jokers just lost their lucrative jobs. I wonder if they still got their benefits and even severance pay.

Film-Related Event Tomorrow In Parkersburg

This Friday, tomorrow, there will be an event tied to the horrible events that took place in Parkersburg, Iowa: the devastating tornado and the murder of beloved Parkersburg coach Ed Thomas. This event is a book signing by the author of "The Sacred Acre", which relates to these events. Tony Wilson, a producer of a motion picture made in Iowa, "The Final Season", has acquired the rights to make a film based on this book. Tony is with the West Des Moines production company, Applied Art. Former Iowa Film Office head Wendol Jarvis will be on hard, as will Governor Branstad and Lt. Governor Reynolds. Iowa Senator Grassley will also be there. This will all occur in the Parkersburg High School Gymnasium, beginning at 6:30 p.m.

I Agree With Dave Thrasher!!

David Thrasher (pictured)

Once again they get it wrong. The tax incentives weren't used to purchase the vehicles. The vehicles were purchased with the production's money and these were turned in as qualified expenses for which tax credits were awarded. There was no check ever written by the state, only a certificate toward money off taxes which the producer could sell to someone else so they could take money off THEIR taxes.

Also, there's never been any prosecutions in regard to the Range Rover or the Mercedes because the law was written so loosely that there was nothing in it to say that such purchases weren't allowed.

Even at this stage of Tom Wheeler's trial there is evidence that those above him are trying to make him the scapegoat and throw him under the bus to divert attention from their own negligence.

from Des Moines Register.Com

http://www.gannettonline.com/external/scripts/momslikeme/?siteid=6171

A
A

Written by
LEE ROOD



Two of the first witnesses in Tom Wheeler’s trial this morning warned the former film chief that filmmakers were were abusing the new film tax incentive program passed by the Legislature in 2007.

Wheeler faces multiple felony charges for misconduct in office, fraudulent practices and conspiracy. Hired to run Iowa’s one-person film office in 2004, he has been accused by state prosecutors of being an “inside guy” for those who abused the program.

Steve Faust, an Urbandale man who worked on several Iowa movies after the incentive was created, testified that he warned Wheeler director Bruce Isacson was drving a Land Rover on the set of “South Dakota” that did not appear to be used in the film.

Faust said he had heard it was being loaded up and shipped back to California.

“I went and said, ‘Tom, do I need to talk to you or someone above you?” he said.
Wheeler, Faust said, told him he would take care of the problem. He also told Faust to not tell higher-ups because he could get fired.

But Faust alo said Wheeler was respected by the people he worked with in the industry and acknowledged Wheeler might have overlooked things because the program was growing so quickly.

Faust said he had no idea whether the law drafted by legislators or rules put into place afterward by the Iowa Department of Economic Development allowed for the purchase of luxury vehicles.

Also this morning, Doug Miller, one of the state’s most experienced film and production professionals, said he warned Wheeler early of potential problems with part of the tax incentive that offered investors in a film a 25 percent tax credit.
Miller, co-founder of Great River Studios in the Quad Cities, said he worked extensively with Wheeler and other industry-backers to create incentives to lure movies to Iowa. He said he knew investor enticements could prove a problem in an industry known to have its share of swindlers, but organizers proceeded with the incentive anyway.

Miller was also expected to testify today that he told Wheeler one movie-maker changed his name after being convicted of bank fraud, and that Wheeler allowed that moviemaker to proceed with a project anyway under a different name.

The film scandal erupted in late summer 2009 after a preliminary audit at the Iowa Department of Economic Development revealed widespread mismanagement and abuses.

The state has doled out $1.5 million in court settlements so far, convicted a handful of filmmakers for trying to defraud taxpayers and fired several state workers.

The incentive program has been suspended until 2013.

from WWW.Algona.com

Algona film project: take three

Tietz hopes third time is the charm for stalled project
By Nathan Countryman, Assistant editor
Published: Thursday, August 11, 2011 10:03 AM CDT

ALGONA — Wendol Jarvis, former manager of the Iowa Film Office, and screenwriter, producer and director Don Thompson visited the Camp Algona P.O.W. Museum on Thursday, Aug. 4.

The duo were visiting the museum to see if a stalled film project can proceed on the Camp Algona P.O.W. that was established during World War II.


The film project originally was being promoted by Larry Webster and Media Majik. The film was to be based off of Don Tietz’s 2007 biographical novel, One American Dreamer, written by Alice C. Bateman.


In 2010 Tietz sued Webster and this year won a judgement default after Webster refused to appear for trial conference calls.


After suing Webster, Tietz brought in a new executive producer, Raw Leiba, director Robert Stock and screenwriters Liz Finn-Arnold and Sandra Longo, but the project stalled.


Jarvis is working with the film on behalf of Gov. Terry Branstad on a volunteer basis to try and reestablish a film office in Iowa following the film scandal.


“I’m originally from Iowa, and am good friends with Don Thompson and Don Tietz,” Jarvis said. “Right now we’re doing research in order to help us find what the story would be of the museum and work on developing a screenplay. The screenplay would be the first baby step towards the filmmaking process.”


Jarvis created the Iowa Film Office in 1984 and left the position in 2002 after budget cuts forced him to lay off two assistants.


Jarvis is originally from Centerville and has ties with the Algona area. His wife is originally from the Emmetsburg area.


According to Jarvis, the soonest filming could begin on any project would be in 2012.


“It is real important that we understand what the story is and how we can relate that to what was happening during World War II.


Jarvis brought on director, producer and screenwriter Don Thompson to give Don Tietz and Jarvis advice on how the project should proceed.


Thompson has worked on numerous films, including “Blood on the Mountain,” “Life Flight,” and “Paradise Trail.”


“I’ve been interested in film since I was a kid,” Thompson said. “I went to Hollywood and got a position at Paramount Pictures and moved out there.”


Thompson worked on several made for television movies.


When he hasn’t worked on films, Thompson has also worked as a radio broadcaster, since the age of 15, including a stint of 15 years at WHO Radio.


“When I wasn’t doing movies, I was working in radio,” Thompson said.


Currently he has a Sunday morning music and memories show, “The Musical Clock Show,” in which he plays Christian music, as well as the hits from the 1940s and 1950s and a spiritual message.


Thompson is originally from New York.


“Wendol called me up on the phone, and because we had worked together on several films I worked on that filmed in Iowa, we became good friends,” Thompson said. “He told me about this project, and it was something I never had come across before.”


Thompson remembers during World War II that P.O.W. Camps were in existence, as he saw them in New York. He didn’t realize, however, that the Midwest ever had any.


Thompson also finds a draw for the story, because of the human element.


“Anything about the military or bringing honor to our military is something I like to do with my projects,” Thompson said.


Thompson has also found there have been fewer decent movies released in the past 20 years.


“I haven’t been to a movie in the past 20 years,” Thompson said. “There aren’t as many family films in existence anymore. I remember when I was younger, my family would go to see Tarzan or the Durango Kid films on Sunday afternoons at the cineplex.”


Thompson said writing the screenplay could take months and additional research trips to Algona and the museum to find the angle needed to best portray the story on screen.

Jeremy Ray Smolik's "Career Day" film fest entry

Jeremy Ray Smolik really impressed me with his "Career Day" entry for the annual 48 Hour Film Festival!!

See it at: http://www.youtube.com/watch?v=Jnloeudui7k&feature=youtube_gdata_player

Iowa's film program costs near $1.5 million with deal

From the Des Moines Register (http://www.desmoinesregister.com/article/20110810/NEWS10/108100311/-1/GALLERY_ARRAY/Iowa-s-film-program-costs-near-1-5-million-deal):

Iowa's film program costs near $1.5 million with deal
by Lee Rood

Producers of the 2009 movie "Smitty" reached an agreement this month with state prosecutors to receive cash and tax credits, pushing the taxpayer tab of court settlements tied the collapse of Iowa's film program to almost $1.5 million.

Under the agreement, makers of the family feature film starring Peter Fonda, Mira Sorvino and Louis Gossett Jr. will receive more than $265,000 in tax credits and almost $60,000 cash.

Jeff Thompson, a deputy state attorney general, said settlements with the makers of "The Crazies" and "The Experiment," two films whose expenses are being audited by the state, are expected to eventually be the largest reached. A handful of others could still receive tax credits.

Several filmmakers had yet to receive credits when the lucrative film incentive program was suspended in 2009 due to abuse and mismanagement. A state audit released in 2010 found 80 percent of the tax credits awarded before the program collapsed - some $26 million of $32 million - were issued improperly.

The state paid $450,000 this year to Midsummer Films, a film company that was planning to spend millions in Iowa before the program was abandoned. The company planned to make six movies, to be filmed over three years, that were worth an estimated $60 million to $70 million.

Late last year, the state also paid a $434,171 cash settlement to After Dark Films. The amount was on top of $315,828 in tax credits previously awarded to the company, which made the horror movies "Husk" and "Fertile Ground."

Next week, Tom Wheeler, former manager of the state's one-man film office, will face charges of felonious misconduct in office, first-degree fraudulent practices and conspiracy. He has pleaded not guilty.

Dennis Brouse, 60, of Plattsmouth, Neb., the owner of Changing Horses Productions, is scheduled for trial March 15.

Chad Witter, 38, of Bettendorf, a tax credit broker accused of helping several filmmakers abuse the program, is scheduled to go to trial April 16.

Harel Goldstein - also known as Harel Gold and Kevin Ward - of Calabasas, Calif., has been charged with first-degree fraudulent practices, forgery and conspiracy. Goldstein, 50, is a movie distributor and was producer of the film "Underground." He has yet to appear in court.

Tom Wheeler trial finally underway

After being delayed 4 times at least, the trial of Tom Wheeler looks like it may be finally beginning, according to this article on WHO-TV's website:

http://www.whotv.com/news/who-story-film-head-court-date-20110804,0,6415666.story

There seems to be a feeling from many people that the idea of this trial is to "throw Tom Wheeler under the bus" and leave higher-ups of his from the Iowa Department of Economic Development (IDED) and members of the Culver administration, including former Governor Chet Culver himself, unscathed by the scandal with total blame assigned to Wheeler. We'll have to stay tuned to see how all of this plays out. Besides the Tom Wheeler trial, there are 3 other known trials that have been reported by the press.

Iowa Film Featured Prominently at the Rural Route Film Festival in New York

Iowa is featured quite prominently in this article in the New York Times about the Rural Route Film Festival in Queens (in New York City):

Filmmakers Head to the Country, in Several Countries

http://www.nytimes.com/2011/08/05/movies/rural-route-film-festival-in-queens.html

From Quad Cities Times

Mel Brooks is cooking up a new horror film to be made in Rock Island.

The $5 million movie - "Pizzaman" - will start shooting in September and is the latest non-comedy project from Brooksfilms, which made "The Elephant Man" (1980), "The Fly" (1986), "The Fly II" (1989) and "84 Charing Cross Road" (1987).

Mr. Brooks, the 85-year-old comedy guru, is best known for spoofs such as "Blazing Saddles," "Young Frankenstein," "The Producers," "High Anxiety" and "Spaceballs," as well as the Broadway musical hit version of "The Producers" (which originated as a straight film in 1968 starring Zero Mostel and Gene Wilder).

The project has been in development at least three years, and while the plot remains under wraps, Hollywood Reporter said the screenwriters are longtime Brooks collaboratorsRudy De LucaandSteve Haberman, who co-wrote 1995's "Dracula: Dead and Loving It," produced by Brooksfilms.

"Pizzaman" will be the film directing debut of Mr. Haberman, who co-wrote the comedy "Screw Loose" (1999), which starred Mr. Brooks.

The Quad-Cities helped land the new film because Great River Production principal Rainer Soehnlein is a business partner of Mr. Brooks, said Doug Miller, GRS co-founder and executive in charge.

GRS, a consulting andproduction management company at 1724 4th Ave., Rock Island, launched in June to help attract and assist other Quad-Cities film and television production. It's separate from GreatRiverProductions, which was formed to make the $15 million computer-generated film "Troll," which is still waiting for final legislative approval of a change in Illinois film tax-credit law to start production.

"Great River Studios has been in communications with the production company and is awaiting approval of the Illinois Film Office," Mr. Miller said of "Pizzman"'s application for state tax credits.

Betsy Steinberg, managing director for the Illinois Film Office, said her office has received an application from Brooksfilms for the movie, but could not provide details. The production will be eligible for tax credits, but Brooksfilms won't be reimbursed until after the production ends and the state audits its expenditures, she said.

The film will shoot in the area for five weeks, and be released in theaters next year, Mr. Miller said.

Ms. Steinberg said she hopes GRS succeeds because "we're hoping to grow outside of Chicagoland." The Matt Damon film "The Informant" was shot in Decatur and Springfield, and the new Superman flick, "Man of Steel," is being filmed in Plano, west of Chicago, she said.

Mr. Miller said they hope to hire as much "local" as possible. "We need expertise in areas leaning heavily toward special effects."

He said he expects many film professionals from the Chicago area will work on the movie, which will be the biggest-budget film made in the Illinois Q-C, he said. "Sugar" (2008), a baseball movie made in Davenport and Burlington, had a similar-sized budget.

"They want something that looks like suburban America, which is what we do very well," Mr. Miller said.

The fact that this low-budget horror film is atypical for Mr. Brooks is interesting, he said."He's so known for his comedies, a lot of people don't realize he gave David Lynch (who produced "Blue Velvet," "Twin Peaks" and "Mulholland Drive") his start.

Auditions will be scheduled soon for "Pizzaman."