Proposed Title of Movie: Film Credits for the Wealthy
Or
The Studio the Taxpayer Built
Plot Summary
Imagine this -- Four wealthy and politically connected businessmen concoct an elaborate scheme, using their checkbooks and relationships, to secure a taxpayer-funded movie studio for their own personal financial gain. Call them “The Gang of Four.”
Scene One: Have Michigan taxpayers provide the greatest tax giveaway for movie making in the country, allowing The Gang of Four to walk away with even more money, subsidized by the taxpayer.
Scene Two: Have Michigan taxpayers (as well as local and federal taxpayers) pay to build them a movie studio.
Scene Three: When newly elected reform-minded politicians threaten to end this scheme, The Gang of Four use their political clout and campaign cash to keep this system in place.
This is a script even Hollywood hasn’t come up with. Read on….
Cast - “The Gang of Four”
Linden Nelson: Linden plays himself, CEO of Raleigh Michigan Studios. Nelson is an entrepreneur involved in various businesses which have resulted in him becoming a very wealthy businessman. He has also had a consistent string of lawsuits and controversies following him over the years.
The Lawsuit: Nelson was involved in a lawsuit following his tenure as CEO of the Beanstalk group. The lawsuit was filed by a former business employee who alleged that Nelson and other executives charged client Ford Motor for extravagant expenses including travel on private jets and other improper business practices. The suit also alleges “a mention in the complaint of former Ford CEO Jacques Nasser taking covert delivery from Nelson of unspecified luxury goods in a Ford parking garage."
There's more. Nelson has had a very mixed record in the second phase of his career as a real estate developer.
Crain's Detroit Business reports:
In 2000, Nelson purchased the former Stanley Door building at 1225 E. Maple in Troy. The 183,000-square-foot building was leased to Irvine, Calif.-based Saleen. However, Saleen moved out, leaving the building vacant. In November 2009, a deed in lieu of foreclosure was filed with the Oakland County Register of Deeds, and the property went back to the lender, Lansing-based Jackson National Life.
In addition, a project in North Las Vegas never got off the ground. From Crain's:
Nelson also was involved with a real estate development in North Las Vegas, announced in 2006. He purchased 160 acres of land for the Desert Star project, a 1.2 million-square-foot retail, dining and entertainment center. Leasing of the project was to be done by Bloomfield Hills-based Taubman Centers Inc.
After receiving preliminary approval for the development, the developers did not seek a final site plan or request building permits…”
Finally, Linden Nelson has been involved in more fire related experiences than most- at least 3 at last count.
Nelson experienced a fire in March 1998 when the Beverly Hills headquarters of Ha-Lo Creative Marketing Inc., where Nelson was CEO, was severely damaged in a blaze ruled accidental by the Oakland County Sheriff's arson investigation unit. The report on that incident cited another fire at the building the year before when an outside trash compactor ignited.
More recently, the Nelson’s $4.9 million mansion burned to the ground in July of 2009. The home was rumored to be in foreclosure.
The cause of the fire remains a mystery. Crain's reports:
The Bloomfield Township Fire Department and Oakland County Sheriff's arson investigation unit have never determined a cause for the July 18 blaze at the 23,000-square-foot house on Wing Lake Road. Investigators found burn patterns in the floor of a teen lounge in the house that “resembled patterns made by ignitable liquids,” however an Oakland County fire dog trained to smell accelerants, including vegetable oil, found nothing at the scene, and a laboratory analysis of the burn patterns also found no ignitable fluids.
However, despite the cause of the fire not being determined, the insurance company did pay a claim on the home. From Crain's: “The house was insured for more than $21 million through American International Group Inc.”
Alfred Taubman: A. Alfred Taubman also plays himself. A gifted businessman and generous philanthropist, Taubman is also a convicted felon having been found guilty in 2001 of price fixing while Chairman of Sotheby’s. He ended up spending 10 months in prison.
Despite his great wealth, and perhaps because of his checkered past, Taubman found kinship with the controversial Nelson to build the taxpayer-funded movie studio.
John Rakolta Jr: Rakolta is President of Walbridge, an international construction firm based in Detroit. He stood to make millions on just the construction of the taxpayer-funded movie studio.
Ari Emanuel: CEO of William Morris Endeavor Entertainment and a partner in the Pontiac film studio. He is also the brother of former White House Chief of Staff Rahm Emanuel, who introduced his brother to Linden Nelson at political events.
Detailed Plot Summary: The Movie Studio Built for Millionaires by Taxpayers
The brain child of Michigan’s film credits is businessman and Democratic Party power broker Linden Nelson.
Nelson came up with the idea of film credits after getting to know then White House Chief of Staff Rahm Emanuel as a result of contributing tens of thousands of dollars to the National Democratic Party and meeting Rahm at various DC political fundraisers.
Nelson then cashed in a favor with Rahm Emanuel, asking to be introduced to Rahm’s brother Ari Emanuel, who is a big shot in Hollywood.
Linden Nelson then asked Rahm Emanuel, who at the time was President Obama’s Chief of Staff and arguably the most influential Democrat in the country, to call then Michigan Governor Jennifer Granholm and press her on the idea of “best in the nation” film credits.
With such a call coming from the White House, and with an outgoing Democratic governor looking for a future job in the Obama Administration, Governor Granholm was only too happy to support best-in-the-nation film credits.
Rahm Emanuel was motivated to help his friend, and major Democratic fundraiser, Linden Nelson even more so when Rahm’s brother Ari Emanuel was cut in on the movie studio deal as a partner standing to profit millions off the deal.
As was rumored in Lansing, former Governor Granholm was also interested in getting a job in Hollywood after her governorship, possibly at the Motion Picture Association of America. While that has not yet occurred, her strong advocacy for the film credits was also thought to be done for her own future career ambitions.
The Studio the Taxpayers Built
Now that the film credits were law, the studio (Raleigh Michigan Studios in Pontiac Michigan) needed to be financed in order to be built.
Although the partners in the studio deal included one billionaire -- Al Taubman and three multi millionaires -- John Rakolta, Linden Nelson and Ari Emanuel -- they preferred to have the taxpayers pay for the studio and incur any risks.
Toward that end, this powerful, wealthy and influential foursome went to work to secure near total public financing of the movie studio using their political contacts.
Their many years of writing checks to politicians paid off handsomely- they pulled off what many believed was impossible -- a movie studio they stood to make millions from paid for almost entirely by the taxpayer.
Major sources of funding for the movie studio include:
- $3.8 million in federal Infrastructure Recovery funds from President Obama’s Stimulus package (Thought to have been secured by the brothers Emanuel)
- $15 million in Federal New Market tax credits
- $11.1 in Michigan Film Infrastructure tax credits
- $18 million in bond financing approved by the Oakland County Economic Development Corporation -- insured by the State of Michigan Employees Retirement System.
The Studio’s “Poison Pill”
As sophisticated businessmen, these four knew the studio and the movie credit scheme was built on a fragile premise -- a too good to be true deal concocted with an outgoing Democratic governor.
What if a new governor wanted to end the film credits, thereby making the studio a risky investment?
Since the movie credits and government funding for the studio were a product of an agreement between Governor Granholm and Rahm Emanuel -- both of whom would soon occupy different roles -- the deal had to include a “poison pill” such that any future governor would think twice about getting rid of the film credits and studio funding.
What does this mean?
It means the taxpayer is on the hook for $18 million if the studio closes down. Former Governor Granhom and lawmakers put at risk $18 million in the State Employees Retirement System as a political payback.
It means the taxpayer is on the hook for $18 million if the studio closes down. Former Governor Granhom and lawmakers put at risk $18 million in the State Employees Retirement System as a political payback.
In addition, tens of millions of other government funding also goes down the drain. The Gang of Four wanted to make it very difficult for politicians to cancel out this sweetheart deal.
Why Didn’t They use Their Own Money?
One partner, Al Taubman, just gave a $56 million charitable contribution to the University of Michigan.
If he believed in the business premise of the film studio, why didn’t he fund it himself? Why didn’t the other “investors” put a substantial amount of their own money in the studio?
They knew it was a risky proposition given that the profitably of the film studio rested on film credits being in effect forever. If they were substantially reduced or eliminated the studio would be a very poor investment.
Accordingly, why risk your own money? Better the taxpayers lose than you do.
If you want to Fleece the Taxpayer- You Must be Bi-partisan
Since Linden Nelson is well-connected in Democratic circles, he had to bring a well-connected Republican into the deal to cover his political bases -- enter John Rakolta.
Rakolta’s construction firm, Walbridge, built the studio and made money doing so. Again, the money used to build the place was taxpayer money -- so even if the studio were to close, Rakolta made money on the deal. Another taxpayer-funded windfall for the Gang of Four. Rakolta stood to benefit from building the studio, so he agreed to be the Republican “heavy” on the political front.
Now, Rakolta is using his Republican political connections to keep the deal going. He and Nelson have had meetings with many Republican legislators and Governor Snyder to try and get their buy in to keep this deal going.
Red Carpet Rolled Out for Randy Richardville
Michigan Senate Majority Leader Randy Richardville has been lobbied very hard by Nelson, Rakolta and the other partners.
Richardville attended the Emmy’s on a trip arranged by Linden Nelson. He also went to a Red Wings game with Nelson in March.
While the majority of Republican legislators oppose further funding of the film credits and are outraged by the way the studio was funded with taxpayer money, Richardville is susceptible to “wooing” and is behind the scenes trying to help Nelson and the Gang of Four.
What to Look for Now -- And The New Ask
The Gang of Four’s chief advocate in the legislature is Richardville. Those interested in this story should look to see if he breaks with the governor and Republican state legislators to support increased funding for the film credits, either publicly or behind the scenes.
One of the top “asks” from the Gang of Four to Richardville is to craft legislation which ensures that any film credit money is used specifically for projects at their studio.
This could be done simply by adding legislative language which would make any project qualifying for the film credits fit criteria which only their studio could comply with.
The film studio folks have hired a slew of lobbyists to cut a deal with Senator Richardville. John Rakolta is paying Scott Romney and the Honigman law firm substantial money to lobby Governor Snyder and the Republican State Senate. This is the Republican strategy to keep this Democratic deal alive.
The film studio folks have hired a slew of lobbyists to cut a deal with Senator Richardville. John Rakolta is paying Scott Romney and the Honigman law firm substantial money to lobby Governor Snyder and the Republican State Senate. This is the Republican strategy to keep this Democratic deal alive.
They are asking for $180 million and for special language (or other legislative action) which ensures any money for film incentives goes for their studio in Pontiac.
If the film credits now take the form of a direct subsidy or appropriation- this group is still looking for a large amount of money which will be directed directly to their studio (to the exclusion of others).
What You Can Do to Stop This
Call your state legislators to stop the film credits and any favored treatment for the Pontiac studio. Also, call the media and ask them to look into this story and find out what Senator Randy Richardville plans to do.
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