Movie Deal Meets Wire Fraud: IRS to the Rescue?
by Terri Eyden on
By Teresa Ambord
The movie was supposed to involve Hollywood giants like Kevin Costner, Ron Howard, and James Brooks. It was supposed to be based on the book A Matter of Time. And under the care of Christina Thompson, it was supposed to make a fortune for the book's author, Don Kirchner of Sedona, Arizona. According to the contract proposal, Kirchner would have a great deal of input into the making of the film. And that's why Kirchner agreed to pay Thompson a $50,000 fee and gave her $12,000 of that up front.
Now, thanks to IRS intervention, Thompson is in prison.
Here's what happened.
Kirchner let it be known he was interested in having A Matter of Time made into a movie. It's an autobiographical story about his days as a helicopter pilot turned drug smuggler, federal fugitive, and prisoner. Thompson learned of the story and introduced herself as someone well connected in the entertainment industry, including her personal friends Ron Howard and Kevin Costner, both of whom had expressed interest in making this movie. She also introduced Bryan Paxton as her business partner. Paxton said he was an assistant to director-producer James Brooks.
Thompson and Paxton said they were eager to make this movie happen.
"She right away picked up the story and was very convincing about big, big producers and directors and seemed to have first-name affiliation with a lot of them," said Kirchner. According to her, she could produce a large return on Kirchner's investment, and all he had to do was pay $12,000 up front. So Kirchner put them in touch with the owner of an Arizona film company, who paid Thompson the requested money as an investment.
Kirchner said the deal seemed to be moving along and he was getting various communications, a deal letter, and movie production agreements. "She even came up with this contract proposal where I was going to have script rights and coproducer status," said Kirchner.
Thompson assured him Hollywood was on board with the plan. "They kept saying James Brooks was going to come into town and we're going to have dinner with him," Kirchner said. "It never happened, never happened."
As documents came in, he forwarded them to his attorney for review. And that's when things began to fall apart. The documents were fake. So Kirchner turned to the IRS.
Without delay, the tax agency responded. The IRS initiated an investigation and had Kirchner wear a microphone to record all the conversations. The agency contacted the celebrities who were supposed to be involved, which was not an easy task, said special agent, Brian Watson. "These people are hard to get ahold of. They have agents, they have press people, and they have a bunch of intermediaries."
Eventually, Howard, Costner, and Brooks did verify that they knew nothing of the supposed deal. But the IRS needed more, and that's when Kirchner found himself in the middle of a sting involving at least twenty-five people.
To get to the bottom of the story, Watson successfully sent in a mole. "We were able to introduce an IRS special agent, go in there, and pose as an investor."
The bottom line was, Thompson was not even from Hollywood. She cooked up and operated this scam while she was living in a halfway house after a fraud conviction. Based on that 2010 conviction, she was serving a fifty-seven-month conviction at the halfway house.
Also, Bryan Paxton was not a Hollywood insider. In a court affidavit, an IRS agent said "Paxton's criminal records demonstrate that his occupation is not in the movie industry, but rather as a construction worker, transient, laborer, car salesman, and body piercer."
Following the investigation, Thompson and Paxton were arrested in February 2012. They both pleaded guilty and were each looking at five years in prison for wire fraud, fines of $250,000, plus repaying the stolen $12,000.
Thompson said in her plea agreement, "In exchange for preproduction fees, both Paxton . . . and I claimed we would have the support of the film-industry professionals to begin production of a movie based on a book authored by Don Kirchner."
AZcentral.com reported that the scam was unusual based on the lengths Thompson and Paxton went to in order to pull it off. They claimed to have offices in Tempe and Chandler, Arizona. They concocted fake involvement in reality TV shows, held investor meetings at the Barrett-Jackson Auto Show, and created a so-called "Offering Deal Sheet" to advance production on the movie.
"Fortunately, we were able to stop this fraud scheme on the early side and limit the financial damage," said Watson. "On many of our cases, we don't get wind of the crime until there are already a myriad of victims."
Thompson is currently serving nineteen months in prison, which will be followed by a three-year probation. Paxton received a twenty-four-month prison sentence.
The good news for Kirchner is, the crime and the resulting investigation brought his book a great deal of attention in Hollywood. "They may have unwittingly opened doors for us that they didn't really have access to."
You may like these other stories...
IRS audits less than 1 percent of big partnershipsAccording to an April 17 report from the Government Accountability Office (GAO), the IRS audits fewer than 1 percent of large business partnerships, Stephen Ohlemacher of the...
Legislation coming out of Washington just might reduce homeowners' burden for disaster insurance. It's a topic very much on everyone's minds since the mudslide in Oso, Washington. The loss of human life was...
Divorce is hard, and the IRS isn't going to make it any easier. The IRS generally says "no" to tax deductions that might ease the pain of divorce. In certain circumstances, however, you might be able to salvage...
Upcoming CPE Webinars
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.