PBS Horse show producer gets 10 years for scamming the Iowa Film Credit program

June 1st, 2012 by Joe Kristan

Dennis Brouse, not dressed for dressage

The largest individual beneficiary of the defunct Iowa film tax credit program got an unwanted bonus from the state yesterday.  Dennis Brouse, producer of the “Saddle Up with Dennis Brouse” series, was sentenced to 10 years in prison in Polk County District Court yesterday.

The Des Moines Register reports that Judge Scott Rosenberg was not pleased with Mr. Brouse’s attitude:

Rosenberg said Brouse’s lack of remorse, combined with his knowing attempt to defraud the state, played into the sentence.

Prosecutors also pointed out in a filing before sentencing that the Plattsmouth man made false statements to a presentence investigator even after he was convicted for abusing the tax-credit program shut down in 2009. Among those false statements: that he never filed for bankruptcy, never gambled and never had his wages garnished.

In fact, Brouse filed for bankruptcy three times in Nebraska and was sued by two creditors — the last time in 2002 for fraudulent misrepresentation over a $100,000 investment, the prosecutors said.

It is altogether fitting and proper for somebody convicted of stealing millions from the state to go away for a long time.  Still, another filmmaker quoted by the Register has a point:

J. Douglas Miller, an Iowa filmmaker who testified at Wheeler’s trial, said he still believes the state is also to blame for the graft that occurred after state leaders enhanced the tax credits, providing little oversight and lenient rules.

“The state really wasn’t up to this, and the bad guys knew it and took advantage,” said Miller, co-founder of Great River Studios in the Quad Cities.

While thieves are solely responsible for their own actions, you aren’t surprised when they take advantage of a shopkeeper who leaves the front door unlocked and cash in the register, and that’s pretty much how it went with the film credit.  The State Auditor’s report on the program showed that the former Walgreens photo-shop clerk who ran the program was able to commit the state to spending millions on the filmmakers (and yes, it was spending, even though it was run through the Iowa tax law) with no oversight, no controls on the credit certificates, no documentation of claimed expenses, and not even a comprehensive numbered list of the credits that were handed out.

While Mr. Brouse, like another filmmaker before him, goes away for 10 years, the politicians who made the looting possible remain at large.  Only three of Iowa’s 150 state legislators voted against the misbegotten film program when it was enacted.   Governor Culver signed the credit into law and gave the keys to the state treasury to a man with no financial background beyond the Walgreens photo counter.  Neither the lawmakers or the Governor bothered to impose minimal financial controls on the program.  They limited their oversight to posing with starlets who came to town to take our money.  The fangirl newspapers had nothing but happy fluffy things to say about the program, until it blew up in scandal and disgrace.  While prison may not be the right answer to their negligence, if they had any decency or respect for us taxpayers, all of these people would make an abject public apology for squandering millions of dollars that they took from us in taxes — and then they would resign their offices and pledge to never run again.

The delusional thinking that led to the film credit program still prevails at the statehouse.  The passage in the most recent session of tax credits for solar power installations and the bill that lets the owners of the “Field of Dreams” keep for themselves the Iowa sales taxes they collect shows that the politicians still think they can wisely direct our forcibly-extracted tax money to specific industries, and even specific businesses, for our own good.  The film credit program is damning evidence otherwise.  The newly-enacted programs are only two of dozens of obscure tax credits and breaks in the Iowa tax law.  While the film credit program may have been extraordinarily badly-run, it’s a leap of faith to believe other tax credit programs are run better — especially when the the only public evidence we have is from the film credit program.  The same people who were involved in the film program still are running the Department of Revenue, with the exception of the Department Director.  The public has no idea whether the other programs are well-run; I doubt that the legislators or the new Governor know either. 

The current system of high tax rates coupled with special favors for those influential or persistent enough to get the legislators to cut them a break is both fundamentally corrupt and economically harmful.  Money directed to preferred businesses and industries by the state will normally be wasted — or even, as in the case of the film credit program, stolen.  The state takes the money from taxpayers who are already here and uses it to lure and subsidize well-connected competitors.  A low-rate, low-loophole tax system would fund the state just as well as our complicated high-rate monstrosity.  Unfortunately, the politicians think they know better how to spend our money than we do.

Link: Tax Update archived coverage of the Iowa film tax credit

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