The Short, Shady History of Hollywood South

Coco Robicheaux was working his bluesy mojo down by the Mississippi Riverwalk. Iced tea in one hand, digital recorder in the other, I had come home to New Orleans on this fine spring day to report on a piece of good news: Louisiana had just become the No. 3 film-producing state in the nation, behind only California and New York. Direct spending on film, TV, and music-video production rose from $12 million in 2002 to more than $1 billion projected for 2007, and the state has played host to Oscar bait such as Ray and All the King's Men, as well as big-budget action flicks such as Déjà Vu and The Guardian. Even Katrina didn't halt a single production. Brad Pitt and Angelina Jolie bought a French Quarter mansion and enrolled their son in a local school while Pitt was making The Curious Tale of Benjamin Button, the biggest-budget feature ever filmed in the state. It had just wrapped in April and was set for a 2008 release.

The film biz was emerging as a bright spot in the region's patchy recovery. Kids I'd grown up with were returning home to take high-wage union jobs as electricians and costumers--the kind of story all too rare in NOLA. And LIFT Productions was at the center of it all: the largest production company around, with TV and independent films totaling $250 million in production budgets over just five years. LIFT was behind the recent Mr. Brooks and Bug, both with big Hollywood names attached. But even more impressive, from the perspective of the local economy, was LIFT's Film Factory--a planned 300,000 square-foot production facility. The groundbreaking had taken place the previous October, and the place was eventually to combine soundstages, postproduction, distribution, audio recording, and even a vocational film school. It would turn LIFT into a real studio--locally owned and operated--and cement the arrival of Hollywood South.

When I met LIFT's CEO, Malcolm Petal, that spring day, he was reveling in his role as mogul-in-the-making. His 31st-floor office on Canal Place commanded views of the French Quarter and the Mississippi Riverwalk. Short, muscular, and goateed, Petal was recumbent on the sofa in his reception area, summoning a masseuse. "We're trying to be a major international hub for film and television," he told me, "and we're off to a grand start."

Petal is a non-native New Orleanian, a Cornell grad and an attorney who'd been instrumental in jump-starting the local film biz by helping craft the new set of tax incentives designed to encourage investment. Petal himself had been swift to take advantage of those new credits, putting together $100 million worth of production deals with the newly formed LIFT and his college pal, Adam Rosenfelt, who ran another production company in California. When I met him, Petal was witty, sharp, and eager to expand on his complicated deals and leveraged investments. But the next day, a rainy Saturday, on the set of one of Petal's movies, I heard a different story. A crew member taking a smoke break pulled me aside, muttering, "Petal's being investigated by the FBI."

I didn't want the gossip to be true, turning my sunny New South business piece into another Louisiana cliché. But as I talked to more locals, the rumors thickened and darkened like a well-stirred roux. Larry Thomas of Film Services of Louisiana, in Clinton, came to the industry in the early 1980s as a dialect coach. ("For some reason, they thought ah could help them with their Suth'n dialects," he drawled slyly.) In March, Thomas told me, the FBI showed up asking about the state film office's financial relationships with the film industry. "I almost didn't answer the door--I thought they were Jehovah's Witnesses," he recalled. "I informed them of some roadblocks I had gone through with the state film office and sent them off with a pile of paperwork. The biggest thing I see is they [at the film office] have their pet people they seem to take care of more than they do others.... LIFT's been treated differently. I don't know why."

Louisiana's film tax credits can be converted into cash by being resold, usually at a discount, to an investor with local taxes to pay. The Times-Picayune reported in June that the Feds suspect LIFT of inflating production costs on at least two films--including Kevin Costner's Mr. Brooks, which was cleared for tax credits based on $34.1 million in expenditures, despite having a stated budget of less than $20 million. When the credits were first introduced in 2002, there was no independent auditing of expenses, and one person was principally responsible for signing off on production spending and converting it into credits: the state film commissioner, Mark Smith.