Cape movie director Daniel Adams will go to prison for tax fraud
Defrauded state to obtain $4.7 million in tax credits for films he shot on Cape Cod
Daniel Adams, age 50, 101 Maple Street in West Barnstable, faces at least two years of prison time now that he has pleaded guilty to charges that he ripped off the state’s film tax credit program.
The Cape Cod-based movie director who directed “The Golden Boys” and “The Lightkeepers" here on Cape Cod was sentenced to serve two to three years in prison and 10 years probation by Suffolk Superior Court Judge Carol Ball.
Adams admitted to 10 counts of larceny and filing false claims with the state for his use of the tax credits. He is also expected to pay about $4.4 million in restitution.
Bilked Cape businesses too
The state won't be hurt too badly by a $4M loss, but Davis also bilked many local Cape businesses out of goods and services as well.
According to prosecutors, Adams fraudulently submitted tax credit applications that claimed inflated expenses for “The Golden Boys” and “The Lightkeepers,” both of which were filmed on Cape Cod. The Massachusetts film tax credit statute provides that a film production company is eligible to receive a 25% tax credit for various payroll and production expenses incurred in the Commonwealth.
The charges included making a false claim against the Commonwealth, and larceny over $250.
AG details investigation
The investigation began in March 2010, when an investigator at the Department of Revenue spotted suspicious tax returns connected to “The Lightkeepers” film. Concerned that these returns might be fraudulent documents, the DOR began an investigation and then referred their findings to the AG’s Fraud and Financial Crimes Division.
After further investigation, prosecutors allege Adams participated in a scheme to defraud taxpayers that began in 2006. Adams allegedly submitted fraudulent tax credit applications that greatly inflated expenses for two Cape Cod based film projects and in turn received a tax credit overpayment of more than $4.7 million.
Daniel Adams Boston and Cape Cod background
Adams grew up in Boston, graduated from The Roxbury Latin School, then took classes at the University of Vermont and Harvard University Extension School. He claimed to have graduated from Harvard. Adams also claimed to have worked in politics, including several high level campaigns, but that too was never confirmed, according to an article in the Boston Globe.
He co-wrote and directed his first feature film in 1989, A Fool And His Money (originally titled, Religion, Inc.), which starred Sandra Bullock, Jonathan Penner, George Plimpton and Jerzy Kosinski.
He wrote and directed "The Golden Boys" starring David Carradine, Rip Torn, Bruce Dern, Mariel Hemingway, Angelica Torn, Christy Scott Cashman, Charles Durning, Julie Harris (without dialog, as a melodeon player in one scene), Stephen Russell, and singer/songwriter Jonathan Edwards, who also scored the film.
Two of Norman Mailer's sons are attached to the film: Michael Mailer is one of the producers, and his younger brother Stephen Mailer plays one of two local ne'er-do-wells, along with actor Donald Foley. The film was released in 2008.
Below is the complete text from Attorney General Martha Coakley's office:
MOVIE DIRECTOR CHARGED WITH FRAUDULENTLY OBTAINING
$4.7 MILLION IN FILM TAX CREDITS
Director of “The Golden Boys” and “The Lightkeepers” Filmed on Cape Cod
Allegedly Submitted Inflated and Fraudulent Film Credit Applications
BOSTON – A Los Angeles based movie director has been arraigned in connection with fraudulently submitting film tax credit applications claiming inflated expenses for two films made in Massachusetts that resulted in an overpayment of more than $4.7 million in taxpayer funds, Attorney General Martha Coakley announced today.
Daniel Adams, age 50, was arraigned today in Boston Municipal Court on the charges of Making a False Claim against the Commonwealth (2 counts) and Larceny of Over $250 (2 counts). Adams was arrested last night without incident by State Police assigned to the Attorney General’s Office.
“We allege that this defendant knowingly defrauded taxpayers by lying about his production costs with the purpose of generating funding for his films and his own personal profit,” said AG Coakley. “Today’s action is an important step to ensure that the film tax credit is awarded appropriately while encouraging legitimate productions to be filmed here in Massachusetts. We want to thank the Department of Revenue for discovering this alleged fraud and working cooperatively with our office to investigate it further.”
This investigation began in March 2010, when an investigator at the Department of Revenue spotted suspicious tax returns connected to “The Lightkeepers” film. Concerned that these returns might be fraudulent documents, the DOR began an investigation and then referred their findings to the AG’s Fraud and Financial Crimes Division.
After further investigation, prosecutors allege Adams participated in a scheme to defraud taxpayers that began in 2006. Adams allegedly submitted fraudulent tax credit applications that greatly inflated expenses for two Cape Cod based film projects and in turn received a tax credit overpayment of more than $4.7 million. The Massachusetts film tax credit statute allows a film production company to receive a 25% tax credit for various payroll and production expenses incurred in the Commonwealth.
In 2006, Adams organized West Wind Productions, LLC (WWP) for the purpose of producing and distributing a motion picture. Through WWP, Adams allegedly solicited independent investors and also sought financing based on the tax credits the film would generate. Tax credit financers will often advance money to projects under an agreement to later purchase the tax credits at a discounted rate after they are issued. Tax credits are issued at the conclusion of a film, when all expenses are reviewed by a Certified Public Accountant and then submitted to the Department of Revenue (DOR).
In December 2006, WWP entered into an agreement with a tax credit consulting firm to partially fund the production of “Chatham,” later renamed “The Golden Boys.” The agreement allegedly included an initial payment to help fund the film as well as the right to later purchase anticipated film tax credits.
At the film’s conclusion, Adams allegedly supplied his expenses to an independent accountant and reported eligible costs to the DOR of more than $6.7 million. This resulted in a tax credit payment of more than $1.6 million. Investigators allege that eligible costs to produce the film were in fact only $2.3 million. As a result, prosecutors allege Adams received an overpayment in tax credits of $1.1 million.
In January 2009, Adams organized Cape Filmworks, LLC for the purpose of producing and distributing a motion picture. Adams allegedly entered into an agreement with a tax credit financer to advance funding for the production of “The Lightkeepers” in return for purchasing the anticipated film tax credits.
At the conclusion of the film, Adams allegedly supplied expenses to an independent accountant and reported eligible costs to the DOR of $17 million. Based on the accepted expense figure, Cape Filmworks was awarded more than $4.2 million in tax credits. According to investigators, Cape Filmworks’ accounts showed that there was in fact no other major funding for the film and that the only deposit of significance was $3 million from the tax credit financer. Numerous items listed as expenditures were allegedly fictitious. For example, prosecutors allege Adams reported that he had paid actor Richard Dreyfuss $2.5 million, when in fact he was paid only $400,000. As a result, prosecutors allege Adams received an overpayment in tax credits of more than $3.6 million.
At his arraignment this morning in Boston Municipal Court, Adams was held on $100,000 cash bail. A probable cause hearing was scheduled for Wednesday, December 14.
These charges are allegations. The defendants are presumed innocent until proven guilty.
The case is being prosecuted by Assistant Attorney General Molly Parks, Senior Counsel for AG Coakley’s Fraud and Financial Crimes Division and was investigated by DOR Investigators Janel Cosgrove and Thomas Nowicki with assistance from Massachusetts State Police.
The AG’s Fraud and Financial Crimes Division focuses on cases of fraud and white collar crimes. These cases include: employee embezzlement; thefts by attorneys and investment advisers; tax fraud; mortgage fraud; and other crimes against companies that impact their financial standing and harm taxpayers.