Here’s a fraud story to tickle an accountant’s funny bone…
A team of five in England are on their way to jail after making a low-budget real movie to cover up that a high-budget fake movie was nothing other than an excuse to rip off the government for $4.2 million. Check out 5 convicted of inventing movie to hide tax fraud from the AP. (Link goes to boston.com but story was picked up by lots of news outlets.)
In 1968, Mel Brooks gave us “The Producers”, the tale of two scammers who dreamed of vastly over subscribing an intentionally terrible play. Their concept? When the lousy play flopped, they could tell all their investors they had lost their money on the fiasco. In turn Max Bailystock and Leo Bloom could pocket all the underwriting from investors.
In 1979, six Americans were rescued from Iran under the cover story of a fake movie. That tale is told in the recent movie “Argo”. There was a real script, real director, announcements in the trade papers, the whole deal. Only thing is the movie was a fake.
In the real story, the production team had cashed the first £1.7M of checks out of £2.8M they were targeting. Their scheme? A big movie, with A-list stars and huge funding from some source in the middle east.
That big movie entitles them to lots of production support and tax credits. You know, all those goodies that governments give away to movie shoots.
When they got busted for suspicion of tax fraud, they apparently took a lead from the rescue plan and created a fake movie.
Well, actually they produced a real movie which they could then pretend was the biggie for which they were getting money from the British government.
You can check out the real-little-movie-pretending-to-be-a-fake-big-movie in the IMDb database here. Estimated production cost is £750K. It actually won an award as it went straight to DVD.
Hmm. If they had pulled this off, they would have stilled showed a positive cash flow of about $1.4 million (£1.7M – £750K = £950k * ~1.5 = $1.4M). Max and Leo would be proud.
But like our dear Max and Leo, their real fake movie plan didn’t work.
According to the AP article, the movie producers were convicted this week and will be sentenced the end of March.
In the best tradition of witty one-liners from fake TV detectives, our story closes with an AP article quote of John Pointing, who is the real revenue agency’s real assistant director of criminal investigation. He said:
‘‘We are pleased that instead of this film flop going straight to DVD, these small-screen z-listers could go straight to jail’’
Hat tip: Going Concern