United States v. Peter Hoffman
901 F.3d 523
| 5th Cir. | 2018Background
- Peter and Susan Hoffman and Michael Arata were co-owners/operators of Seven Arts Pictures Louisiana, LLC, which sought Louisiana film infrastructure tax credits for renovating 807 Esplanade into a postproduction facility.
- Seven Arts submitted three cost reports and accompanying audits claiming millions in qualifying expenditures; prosecutors alleged many claims were supported by fabricated invoices and circular bank transactions that made transfers look like vendor payments.
- Louisiana issued transferable tax credits after the first cost report; later audits and a forensic review led to revocation and a joint state–federal criminal investigation.
- A grand jury returned a 25-count indictment charging conspiracy to commit mail/wire fraud, multiple counts of wire/mail fraud, and false statements; a jury convicted Peter on 21 counts, Arata on several counts, and Susan on a small subset.
- The district court granted partial post-verdict acquittals as to several counts, denied new-trial motions, imposed probationary sentences for all three defendants (well below Guidelines ranges), ordered limited forfeiture, and denied restitution. The government and defendants appealed various rulings.
Issues
| Issue | Plaintiff's Argument (Government) | Defendant's Argument | Held |
|---|---|---|---|
| Whether Louisiana film tax credits constitute "property" under the mail and wire fraud statutes | Tax credits are economic benefits that reduce state revenue; obtaining them by fraud deprives the State of property and fits Pasquantino’s tax-revenue-as-property precedent | Defendants relied on Cleveland and Griffin: tax-credit/license/regulatory interests are non-property when they are regulatory allocations or unissued federal credits | Held: Tax credits are property here because (i) they were state-issued, transferable credits that reduced the treasury, and (ii) the scheme caused an economic drain—Cleveland and Griffin are distinguishable. |
| Sufficiency of evidence for conspiracy and substantive mail/wire fraud counts | Evidence (ledgers, fabricated invoices, circular transactions, emails, auditors’ testimony) established scheme, intent, and interstate wires/mails in furtherance | Defendants argued good-faith compliance with ambiguous state program and that some wires/emails were not shown to be interstate or not in furtherance; Arata claimed withdrawal from conspiracy | Held: Convictions largely upheld; several district-court acquittals reversed and reinstated where reasonable juror could find (i) scheme and intent, (ii) wires/mails furthered the scheme, and (iii) Arata did not prove withdrawal as the only reasonable inference. |
| False-statement counts against Arata for FBI interview | Government: Arata knowingly made material false statements to FBI about his involvement and disclosures | Arata: Statements were truthful or at least not knowingly false given the nuances of his relationships and disclosures | Held: Some false-statement acquittals reinstated (counts 23–25) where jury could reasonably find knowing falsity; one count (claiming he ‘‘terminated his relationship’’) affirmed as acquitted due to ambiguous meaning. |
| Reasonableness of noncustodial sentences (probation) given Guidelines recommendations | Government: Probation for leader of a sophisticated multimillion-dollar fraud (and prior related conviction/perjury) is substantively unreasonable; sentence disparity and deterrence concerns warrant vacatur and resentencing | Defendants: District court reasonably weighed §3553(a) factors (project completed, state ultimately benefited/earned credits, health, age, lesser roles) and exercised discretion to impose probation | Held: Peter Hoffman’s probation sentence vacated as substantively unreasonable and remanded for resentencing; Arata’s probation vacated and remanded (to consider reinstated counts); Susan Hoffman’s probation affirmed given limited role and mitigating factors. |
Key Cases Cited
- Pasquantino v. United States, 544 U.S. 349 (2005) (tax revenue is property under mail/wire fraud; evading taxes can be wire fraud)
- Cleveland v. United States, 531 U.S. 12 (2000) (state-issued regulatory licenses are not property when scheme does not deprive government of money)
- United States v. Griffin, 324 F.3d 330 (5th Cir. 2003) (allocation of unissued federal tax credits by a state agency is not state property; distinguishable where credits actually issue and reduce treasury)
- Pinkerton v. United States, 328 U.S. 640 (1946) (co-conspirator liability for reasonably foreseeable substantive offenses in furtherance of conspiracy)
- Skilling v. United States, 561 U.S. 358 (2010) (limits and vagueness concerns surrounding honest-services fraud; distinguishes property-based fraud from intangible-rights prosecutions)