They paid for what they believed would be state movie-industry tax credits returning $1.33 for each dollar they invested. But state officials say Wayne Read, the CEO of the bankrupt Louisiana Film Studios LLC, never applied for the credits and the money was never returned to investors.
The Paytons' suit, which doesn't name Read as a defendant, says the couple paid Houser, a licensed securities dealer, $144,000 in late 2008 for what they believed would be $180,000 in state tax credits.
Louisiana's film tax credit program is designed to promote the movie industry in the state. Buyers of tax credits receive a reduction in the actual amount of income taxes they pay, unlike a deduction, which only reduces taxable income. The credits can be bought and sold.
Like the earlier suit, the Paytons' alleges Houser failed to disclose the studio owed nearly $700,000 to a construction company co-owned by his wife, Kristen, and that he kept an unspecified commission or finder's fee.
The suit also asks for class-action status to cover all the tax-credit buyers, who could number more than 100.
Court papers don't indicate who is representing Houser in the Paytons' suit. But attorney Jimmy Castex, who is representing his wife's construction company in a bankruptcy proceeding against the studio, has said Houser and his wife paid $125,000 for tax credits and are victims themselves. Houser has been instructed not to talk about the case, and Castex is speaking for him until a decision is made about who will represent him in the lawsuit.
The dispute became public last July after Houser was cut from the team. Payton has maintained Houser's departure wasn't related to sale of the investments.
Last summer, Read said he was looking for other investors in the studio and that initial expenses had been higher than anticipated. He said the credits were never applied for because of confusion over what expenses qualified.
Some of the credit buyers, along with Houser, forced the studio into involuntary Chapter 11 reorganization in July. In February, U.S. Bankruptcy Judge Elizabeth Magner converted the case into a Chapter 7 liquidation after a court-appointed trustee said it was unlikely the studio could come up with a business reorganization plan to pay off its creditors.
Copyright 2010 by The Associated Press