The Short, Shady History of Hollywood South

Smith left government last year to work for a film-industry firm. And in a May interview, he seemed to agree that lack of oversight of his office had been an issue. "I was working my butt off," he told me. "There were no accountants.... You don't want to put the responsibility of [auditing expenses] on the film office." But a civil lawsuit now parked in the 19th District Court alleges that an accountant shortage wasn't the problem: "There were illegal transactions taking place between [LIFT] and Smith in the form of money being given to Smith in exchange for his steering film and television production toward LIFT, and assisting and approving the acquisition of film tax credits for these companies."

Smith did not respond to requests for comment about the suit, while a lawyer for LIFT answered the allegations by telling me, "Whatever we did do is legal and was legal under the laws as they stood." But a lawyer for the state of Louisiana in the civil suit told me that "quite a number of individuals have signified their intention to plead the Fifth. This is going to impede the discovery of evidence in the case." Discovery will only be made more difficult by the fact that one of the people cited in the civil suit, Petal's former business partner, John Anderson, who claims to still own 44% of LIFT, is now telling reporters that he was "joking" when he told the plaintiff that there was a kickback scheme in place between Petal and Smith. It could be a long fall.

During our conversation, as Petal lolled on his couch, he described his operation as "very cooperative, transparent, and successful." By contrast, he depicted the rest of the local industry as something out of The Day of the Locust, full of the paranoid and delusional. Pausing to choose his words carefully, he said, "I'm not a psychologist, but as a layman it always seems to me that [people in the film industry] lack a certain sense of self-worth or identity.... A lot of people feel entitlement to careers in this industry. Not careers that they earned."

Six weeks later, on June 1, the FBI raided Petal's glass tower. Petal took a leave of absence and would not comment further to Fast Company; neither he nor Smith had been charged at press time. Over the summer, Louisiana's legislature passed a series of bills to close the loopholes and limit tax credits going forward. LIFT's credits were frozen, and in early July, it was announced that a newly formed company, Louisiana Production Resources, would be leasing or subleasing LIFT's film-production assets and employing its crews and staff.

But no cleanup is good enough if the business flees. "I don't think it will slow anybody from coming," said John Hardy, executive producer of Ocean's Twelve, from the New Iberia set of In the Electric Mist, starring Tommy Lee Jones. "It's just common sense that people will come here to save money." But with 46 other states now instituting some type of film tax credits, the fear is that the scandal will drive away future deals from Louisiana as quickly as they once flocked here. And the prospects of the big infrastructure projects, which could really support the local workforce and industry, are even more frustrating to contemplate. LIFT's Film Factory, with a $185 million estimated budget, had been the largest such proposal certified. Today, not a single bulldozer can be seen on the site, an empty lot in a neighborhood west of the French Quarter that is beaten down and blighted like so much of the city.

"This industry is smoke-and-mirrors sometimes," Mark Smith told me back in May. "I can touch it in New York and L.A.; I can see the headquarters and see who the real players are. In places like Louisiana, who can see it?"

That miragelike quality has always been part of the city, as endemic as beignets and dry rot. But as New Orleans crawls back from the biggest natural disaster in American history, there's just too much at stake to ignore the cost of our old habits. Politics as usual isn't enough anymore. "I believe that building a cultural economy is Louisiana's birthright," Petal said at his office. "The fact that the business side has never happened here is tragic." I couldn't agree more.

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