BusinessReport.com

It’s been more than a year since dozens of investors shelled out hundreds of thousands of dollars to buy tax credits from former state Rep. Gary Beard, who had qualified to receive them from the state for a massive movie studio complex he was planning for the Baton Rouge area.

But investors have yet to see those credits—and they’re getting antsy. Two have filed suit, with one winning a nearly $126,000 judgment against Beard, and more are expected to follow.

Problem is, Beard doesn’t have the credits and never did. The state has refused to grant them because of questions about his alleged expenditures on the proposed half-billion dollar studio complex—which has never been built—and that he awarded the engineering contract for the project to himself.

It’s an unusual case, made all the more so because Beard, who was a public official at the time he accepted payments for the credits and was also a candidate for lieutenant governor, has refused to respond to the lawsuits filed against him. He has also declined to discuss the matter publicly.

But even more strange is that Beard persists in trying to obtain tax credits on the project. Last month, he filed new documents with the state Office of Entertainment Industry Development, revising his plans for the studio complex, which he now wants to build in a Shreveport shopping center. It’s a scaled-down project that would cost $75 million instead of half a billion. State officials have OK’d the change of plans and said if he can get it up and running he may finally get a portion of the credits he so desperately needs.

But some of the investors who thought they were buying Beard’s tax credits last year are skeptical. They’re also frustrated with a state program that would allow tax credits to be sold on the open market before they’ve actually been awarded. These investors bought credits in 2007 to apply to their 2006 state tax bills, which were due last May; that means they’ve paid twice.

“We need to pay some sort of taxpayer’s bill of rights,” says lobbyist Randy Haynie, who’s out $44,000 for some $56,000 worth of credits he thought he was buying. “So that when we buy something, we know it’s been state-approved and has been through some sort of process and is completely cleared.”

When the state approved Beard’s original plans for the Louisiana Film Institute, it seemed tailor-made for the state’s movie industry tax credit program, which was designed as an incentive to encourage film production and infrastructure projects. Beard, a local engineer, presented ambitious plans for a $500.7 million complex of sound stages, recording studios, a film industry training institute, condos and an upscale hotel that would be built on two sites in Baton Rouge and St. Francisville. He received the state’s blessing and was precertified to receive $320 million in infrastructure credits.

But when Beard tried to collect his credits in late 2006, the state refused. An independent audit and a report from the state’s in-house counsel raised troubling questions about the legitimacy of his expenditures on the project and that he had awarded the engineering contract for the job to himself. Beard argued he had done years of preliminary engineering work worth $700,000. But the state countered that he had nothing to show for it in the way of bricks and mortar, just some impressive-looking plans and a promissory note to his own engineering firm that he never bothered to pay.

Nevertheless, in early 2007 Beard put his tax credits up for sale on the open market. That is typically how state tax credits are traded; CPA or brokerage firms buy them in bulk and then sell them to third parties, who need or want them to apply to their state tax bills.

“We didn’t even know who we were buying from,” Haynie says. “When our CPA firm offers them to us, we buy them.”

Beard never produced the credits, to Haynie or any of the others. When the investors and their attorneys started asking questions he stalled, according to court records, first offering excuses that didn’t pan out then simply ignoring repeated calls. After a Business Report story last summer detailed Beard’s problems with the state, one of those investors, Apex Transfer and Exchange of Lafayette, sent Beard a certified letter demanding that he return their money.

Beard never responded to the letter, nor did he answer the lawsuit Apex filed last September. Because he refused to answer the suit within the prescribed amount of time, East Baton Rouge District Judge Janice Clark awarded a default judgment to Apex in the amount of $125,860 plus interest, damages and attorneys fees, which will total $140,000 when all is said and done. In November, Haynie also filed suit. His case has yet to go before a judge. Again, Beard has ignored the legal proceeding against him.

Beard has also declined to discuss the lawsuits or the tax credit issue with the media. His associate, Lee Serio, referred all calls to attorney John Henchy. An assistant to Henchy said he had not comment.

Beard is also keeping mum about his latest attempt to earn tax credits. According to documents filed with the state in early January, Beard now wants to move $75 million worth of his megaproject to Shreveport, where he would develop a more modest film studio in a shopping center owned by the Summer Grove Baptist Church. Beard is negotiating to purchase the building from the church for $59 million.

According to church members, who asked not to be identified, the church will finance the deal and Beard has agreed to make 20 years of interest-only payments. He has also promised to spend $16 million renovating the building and converting it to a studio.

But church members say Beard has told the church he will use his tax credits from the state to finance the renovations. How he intends to get them before he has done the work is unclear. He still doesn’t have the credits, and state officials have said he won’t get them unless and until he spends money to get the studio up and running.

“Credits are not given until actual expenditures are made and real film infrastructure is in place,” says Chris Stelly, director of film and television in the Office of Entertainment Industry Development.

Even if he were to get the credits, he is legally obligated to pay off the judgment against him before he can spring for shopping center renovations. That seems not to bother church leaders at Summer Grove Baptist, however, who support the project. Beard is a Christian conservative who has found himself among friends in north Louisiana. They are aware of the lawsuits against him and are still inclined to go forward with the project, particularly because Beard has said he will only make Christian films.

“That’s very important, and we believe that would be a good thing,” says one church member who asked not to be identified.

For their part, state officials are taking the politically safe road and remaining guarded in their comments about Beard. They have certified his latest plans as eligible for tax credits, and insist that no one from the new administration has interceded politically on his behalf. At the same time, however, they stress that Beard will only get the credits if he spends money to build a studio and has something to show for his work.

“We have not issued any credits on this project to date,” Stelly says. “We will make sure that the state’s investment is protected and also ensure that if we issue credits, there is motion picture infrastructure, which is what the program was designed to do.”

State officials also note that since Beard’s tax credit transactions last year, the state has tightened the laws governing how infrastructure tax credits are awarded. The Legislature passed the changes last summer to prevent, in part, situations like Beard’s from happening in the future.

But that still doesn’t help investors like Haynie, who paid for tax credits—and then had to pay their tax bills. Something doesn’t add up, he says, and no one at the state level seems to care enough to address it.

“We’re citizens and taxpayers, and not only did we pay for tax credits but we ended up having to pay our tax bills, too,” he says. “It’s just not right.”