United States District Court, E.D. Louisiana
ORDER AND REASONS
MARTIN L. C. FELDMAN, District Judge.
Before the Court is the defendants' motion to dismiss second superseding indictment pursuant to Rules 6(e)(3)(E)(ii) and 12(b)(3)(A)(v) of the Federal Rules of Criminal Procedure. For the reasons that follow, the motion is DENIED.
In this financial fraud case, three defendants face federal criminal charges including wire and mail fraud and conspiracy, and one of those defendants, Michael Arata, also faces false statements charges. These charges arise out of the defendants' alleged scheme to defraud the State through their participation in the State of Louisiana's infrastructure tax credit program.
Peter and Susan Hoffman and Michael Arata were partners in various movie-related business ventures. One such venture was the purchase and renovation of a dilapidated mansion at 807 Esplanade Avenue in New Orleans, which they turned into a post-production film editing facility. In connection with this renovation project, the Hoffmans and Mr. Arata (through companies they owned) allegedly committed, aided and abetted, and conspired to commit, mail and wire fraud by submitting false expense reports in order to deceive the State of Louisiana into issuing state tax credits that they had not actually earned and were not entitled to receive.
The underlying facts are more completely summarized in the second superseding indictment and in this Court's Order and Reasons dated July 18, 2014 (United States v. Hoffman, No. 14-22, 2014 WL 3589563, at *1-3 (E.D. La. July 18, 2014), as well as in other Orders and Reasons, including this Court's March 20, 2015 Order and Reasons in which the Court denied the defendants' motion in limine for rulings on three issues of law regarding mens rea and their motion in limine to determine an issue of law regarding benefit of the bargain. Of note to the resolution of the present motion, the Court observed the following in its March 20, 2015 Order and Reasons:
Peter Hoffman and Michael Arata seek a pretrial ruling on three issues of law regarding the mens rea element of their mail and wire fraud charges. They submit that the Court should rule that:
1. The United States is required to establish as a matter of law that Louisiana Revised Statutes Annotated § 47:6007 as in effect in 2007, the Regulations promulgated thereunder, and official acts of the State of Louisiana in the form of Revenue Rulings ("Applicable Louisiana Tax Law") must clearly and unambiguously forbid and make illegal each act or conduct that the United States alleges in the Second Superseding Indictment is a violation of 18 U.S.C. §§ 1341 and 1343, at the time of the acts or conduct so alleged occurred.
2. The Applicable Louisiana Tax Law did not at the times alleged in the Second Superseding Indictment clearly and unambiguously forbid and make illegal the following acts or conduct therein alleged:
A. Claims for "base investment" under Applicable Louisiana Tax Law confirmed through formal cash transfer or alleged "circular payments."
B. Claims for "base investment" under the Applicable Louisiana Tax Law for services not yet completed or equipment not yet delivered.
C. Claims for "base investment" under the Applicable Louisiana Tax Law in the form of "related party" contracted commitments due to persons affiliated with the claimant, Seven Arts Pictures Louisiana LLC, for development for equipment and/or interest.
3. The United States is required to prove at trial beyond a reasonable doubt that Defendant[s] Peter Hoffman [and Michael Arata] did not have a good faith belief that his acts or conduct were a violation of the Applicable Louisiana Tax Law and that Defendant[s] Peter Hoffman [and Michael Arata] through such acts or conduct made a voluntary, intentional violation of a known legal duty.
In support of this proposed ruling, the defendants contend that the government must prove beyond a reasonable doubt that the challenged conduct was an intentional violation of a known duty and not based on a good faith belief that the challenged conduct was not criminal. The defendants also contend that the Act, La.R.S. § 47:6007, specifically approves related party transactions and its regulations requiring payment of base investment were not promulgated until after the first two applications were submitted by the defendants. How is this, they ask, a criminal ...