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.