The Prairieville producer of “The Tell-Tale Heart” has sued a New Orleans company he planned to sell the movie’s $481,000 in tax credits to, alleging the firm tricked him into turning over the credits without paying for them and that the resulting cash-crunch forced the film’s company into bankruptcy.
In the complaint filed in U.S. Bankruptcy Court in Baton Rouge, producer J. Matt Keith claims he signed a deal Aug. 13 to sell the film’s state-issued tax credits to Inner Media Capital LLC. The lawsuit says Keith had sold state tax credits to Inner Media on a number of occasions, and he thought selling the “Tell-Tale” credits would be a routine transaction.
However, the packet of documents Keith signed Aug. 13 was significantly different than usual, the lawsuit says. Under the new agreement, instead of paying Keith for the credits, Inner Media gave itself the option of using the payment to cover some of the $1.3 million that it said Keith and his partners owed the company for two reality TV shows.
Keith said he found out about “the ruse” 10 days later, when one of Inner Media’s attorneys sent the producer a letter saying he still owed the company $781,000. The letter gave Keith five days to pay or the firm would take him to court.
“The sudden loss in expected funding, and the unjustified encumbrance of the debtor’s property made the marketing of the film nearly impossible and imperils the value of the film,” the lawsuit says.
Keith’s company, Tell Tale Heart LLC, filed for Chapter 11 protection from its creditors in bankruptcy court Sept. 4.
The film, shot in New Orleans, is based on Edgar Allen Poe’s gothic short story of the same name. According to website IMDb.com, the film is “a haunting account of a tormented man who continually re-admits himself into a halfway house in a futile attempt to escape a spiral into madness.”
The film’s cast includes Rose McGowan, Patrick John Flueger and Peter Bogdanovich.
Keith’s lawsuit asks the bankruptcy court to void the tax credit transfer and for damages caused by Inner Media’s “fraudulent conduct.” Those damages included delaying the film’s completion, preventing Keith from getting the film to market and harm to Keith’s reputation with other investors.
On Sept. 18, Inner Media filed a lawsuit in 19th Judicial District Court to recover $1.2 million from Keith and three of his companies, Mysterious Island LLC , Dirty District Entertainment LLC and Leverage Entertainment LLC; and Baton Rouge filmmaker George M. Kostuch and three of his companies, K2 Pictures LLC, K2 Holdings LLC and K2 Distribution and Sales LLC.
The lawsuit says Inner Media made three loans in exchange for tax credits generated by two reality series, “First Date” and “Living with Leroy.” Keith and Kostuch guaranteed to repay the loans, it said.
Inner Media never got any of the tax credits, according to the lawsuit.
On Sept. 20, Tell Tale Heart LLC filed a complaint in bankruptcy court.
Keith’s attorney, Wade Iverstine, said he could not comment on the lawsuit. Inner Media officials initially said they wanted to comment but did not respond to subsequent phone calls.
Louisiana Economic Development Secretary Stephen Moret said it has been more than two months since the department’s Office of Entertainment Industry Development certified all of the film production tax credits associated with the movie.
LED has no role in the transfer of tax credits once they are issued, Moret said. The transfers of tax credits are private transactions between third parties, he said.