IOWA CITY, Iowa (AP) - An appeals court on Wednesday threw out the conviction of a Nebraska filmmaker facing a lengthy prison term on charges that he fraudulently claimed tax credits under a scandal-tainted program to build Iowa’s film industry.
The Iowa Court of Appeals ruled 2-1 that it was impossible for jurors to find sufficient evidence to convict Dennis Brouse of fraudulent practice because of confusing jury instructions. Jurors acquitted Brouse of theft at his 2012 trial.
The ruling is another setback for the criminal investigation that followed one of the most mismanaged government programs in Iowa history. If it stands, the ruling also may give a boost to Brouse’s civil lawsuit in which he is seeking millions of dollars for three film projects that were pending when Gov. Chet Culver abruptly terminated the credits in 2009.
Brouse, of Plattsmouth, Neb., owns Changing Horses Productions, which produces public television programs and DVDs related to horse training. He moved his company from Nebraska to Iowa and hired an accountant to take advantage of tax credits approved by lawmakers in 2007 that were the most aggressive in the nation and advertised as “1/2 price filmmaking.”
Brouse’s company received credits totaling $9 million before the program was ended, following an audit that found millions were improperly awarded because of lax oversight and potential fraud. His program, “Saddle Up,” claimed credits on partnerships in which sponsors would advertise the show on their website and their company or product would be featured on the show. Such deals were allowed by the Iowa Film Office to qualify even though no cash changed hands and some sponsors believed they were overvalued.
One such exchange involved a 38-foot camper that Brouse purchased from a couple for $10,500 cash. His company submitted the purchase as a $21,000 expenditure after giving the couple’s restaurant free advertising on the show - an arrangement the sellers didn’t approve.
The Iowa Attorney General’s Office charged Brouse and his accountant, Chad Witter, with fraudulent practice, first-degree theft and ongoing criminal conduct. Jurors convicted Brouse of fraudulent practice but acquitted him over the other two counts. A judge sentenced him to 10 years in prison, but he has been free on a $25,000 appeal bond. At a separate trial, jurors acquitted Witter on all counts.
Jurors also rejected most of the state’s case against former film office director Tom Wheeler, finding him guilty on one count of misconduct and acquitting him on eight others. Wheeler received probation and a deferred judgment from a judge who said he became too cozy with filmmakers rushing to take advantage of the program.
Appeals Court Judge Michael Mullins wrote in Wednesday’s majority opinion that Brouse’s conviction was tainted because prosecutors failed to prove at least one of the four theories of guilt that were submitted to jurors. Because a general verdict was used, prosecutors had to prove all four for Brouse to be guilty, Mullins wrote.
Brouse argued he could not have been found guilty of engaging in joint criminal conduct since he was acquitted of theft. Prosecutors conceded that point, but argued that jurors obviously rejected that theory and found him guilty on another.
Mullins disagreed. He said the instruction on joint criminal conduct was so unclear that judges have no confidence that jurors were able to properly assess Brouse’s guilt or innocence.
“After examining the jury instruction and finding it so confusing, we conclude that it was not possible for the jury to find sufficient evidence to convict pursuant to a general verdict that implicated the joint criminal conduct instruction,” wrote Mullins, joined by Judge David Danilson.
Dissenting Judge Anuradha Vaitheswaran said the conviction should have been upheld because Brouse did not challenge the jury instruction in question, only the sufficiency of the evidence.
Prosecutors could ask the Iowa Supreme Court to review the case, a move Brouse’s attorney expects.
Attorney General’s Office spokesman Geoff Greenwood said that attorneys are “reviewing the court’s split decision and are considering our options.”