Judge Freezes Assets Of Louisiana Film Studio

((HT: NOLA.com via Howard Bloom))

A judge Friday froze most of the assets of a movie studio at the heart of a $1.9 million investment dispute involving members of the New Orleans Saints.

U.S. Bankruptcy Judge Elizabeth Magner took the action against Louisiana Film Studios LLC, the target of an involuntary bankruptcy suit by several buyers of state movie industry tax credits peddled by studio chief executive Wayne Read.

The buyers were supposed to be paid $1.33 on March 31 for each dollar invested. But since then, state film office officials have said Read never even applied for the credits.

Magner set a hearing for Aug. 7 on whether to appoint a court-supervised financial overseer. Read, who was not at the hearing, signed an agreement late Thursday saying he would not dispose of any of the studio's assets.

Read has not hired an attorney for the studio, but lawyer William Patrick appeared at the hearing on the studio's behalf, saying he had not yet accepted a retainer. When attorneys said Read had been spotted at the federal courthouse complex, Patrick tried to reach him by telephone at the judge's order.

"I'd like to see the whites of this individual's eyes," Magner said.

Read never appeared. After that, Magner met with attorneys behind closed doors, then put the agreement Read signed into effect.

Among the current and former members of the Saints pursuing the bankruptcy suit are linebacker Scott Shanle, former Saints punter Mitch Berger and long snapper Kevin Houser, now with the Seattle Seahawks, who thought they were buying tax credits. Other buyers included Coach Sean Payton, quarterback Drew Brees and former star Archie Manning.

Read has said he ran into higher-than-expected expenses and lower-than-forecasted revenues in starting up the studio. He said the tax credits were never applied for at the end of 2008 because of confusion over what expenses qualified for credits. He has said he plans to pay back the buyers after finding other investors.

No criminal charges have been filed. Jimmy Castex, an attorney representing a construction company also pushing the involuntary bankruptcy suit, has said the FBI has contacted parties involved in the case.

Illinois court records show Read paid $452,000 on January 21 to settle a dispute over another failed investment involving the movie business.

Saints Players Sue Movie Studio

((HT: New Orleans Times-Picayune/Sayre))

A New Orleans Saints linebacker and two former players sued a film studio Thursday to try to get their money back from investments they say were never made.

Current Saints linebacker Scott Shanle, former punter Mitch Berger and recently cut Saints long snapper Kevin Houser are seeking the return of $468,750 invested with the studio's head, Wayne H. Read. Read ((pictured, thanks Kathy Anderson/New Orleans Times-Picayune file)) was not named personally in the petition. They filed an involuntary bankruptcy petition against Louisiana Film Studios LLC, located in a New Orleans suburb.

Coach Sean Payton, quarterback Drew Brees and Hall of Famer Archie Manning were among 27 people who bought what they thought were state film industry tax credits that promised a projected return of $1.33 for each dollar invested. A state official, however, said the studio never applied for them. The investments, which totaled $1.9 million, were due to be paid on March 31.

Also joining the lawsuit was a construction company half-owned by Houser's wife, claiming that the studio owes it $681,418 for work done on a renovated grocery warehouse that Louisiana Film Studios leases. Two other investors in the tax credits made claims totaling $134,000.

Under bankruptcy law, anyone with a claim against the studio can join the lawsuit. Under involuntary bankruptcy, creditors will try to obtain a court ruling that the studio is unable to pay its debts. After that, the case would be handled under Chapter 11 of the bankruptcy law, which would require reorganization of the studio's debt and payment to its creditors.

Neither Read, who does not have a listed telephone number, nor his spokesman, Alan Katz, could be reached by telephone for comment late Thursday. A message was left with Katz. Read earlier said he intended to repay the investors after he finds other investors for his project or through tax credits purchased from a broker.

Read said money became tight because of higher-than-expected expenses and lower-than-expected revenue during the project's startup.

The head of the state office that promotes film industry development in Louisiana and administers the program, Sherri McConnell, earlier said the studio didn't have the credits to offer in the first place -- because it never applied for them.

Read has other financial problems from his venture into the movie business.

In addition to a lawsuit filed in state court by the construction company, St. John the Baptist Parish alleges that Read owes $100,000 for the use of its community center for a movie in 2007. Read has said he also intends to repay that money and settle with the construction company.

Manning earlier told The Times-Picayune of New Orleans that he had been contacted by the FBI. Houser said he had talked with a law enforcement agency that he refused to identify. Both the FBI and the U.S. Attorney's Office have refused to confirm or deny an investigation.