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Wednesday, Oct 22, 2014
Business News

State sues Digital Domain to try to recoup $20 million in incentives


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— Gov. Rick Scott’s administration Tuesday filed a politically charged lawsuit trying to recoup millions of dollars it says a now-bankrupt special effects company “fraudulently” secured from the state.

The lawsuit takes aim at Digital Domain, a company the state says circumvented normal channels to secure $20 million in state incentive money.

The company later used that money as leverage to secure millions more form Port St. Lucie and West Palm Beach, according to the lawsuit filed in St. Lucie County court by the Department of Economic Opportunity, which is overseen by Scott’s office.

The company filed for bankruptcy in 2012, laying off 346 employees and shuttering its Port St. Lucie facility. The city has been on the hook for $3.4 million in annual debt payments on the $39.9 million it borrowed to pay for the building.

The city also gave the company $10 million for its commitment to create 500 jobs by 2014.

The deal was approved by Charlie Crist, then the Republican governor, who is featured prominently in the lawsuit. It says company officials were able to work around normal economic development channels by “wooing” Crist, who is likely to be the Democratic nominee running against Scott.

The potential that the lawsuit, which the state has set aside more than $500,000 to fund, could be used as a political weapon kept Port St. Lucie from filing its own lawsuit against the company.

“As we get into the political season, I certainly don’t want it to be used as political fodder,” said city manager Jeff Bremer.

John Textor, the company’s chief executive, first sought incentive money from Enterprise Florida, the state’s public-private economic development wing, in 2008. That agency rejected the first application and another attempt in 2009, citing concerns over “profitability, income, equity and debt financing,” among other things.

In 2009, lawmakers passed budget language crafted by former state Rep. Kevin Ambler, R-Tampa, that helped circumvent Enterprise Florida. Under that language, the money would “revert” to the Office of Tourism, Trade and Economic Development, which was overseen by Crist’s office.

Dale Brill, the governor’s economic development chief, later wrote a funding recommendation to send the money to Digital Domain, a recommendation that was later approved by a panel of lawmakers that signs-off on mid-year budget adjustments.

In an inspector general’s report released in March 2013, Brill said that he knew he had to give a positive recommendation or he would be “looking for other work.” Scott asked his inspector general to compile the report after Digital Domain’s 2012 bankruptcy.

That report showed Ambler, who along with 22 others is a listed defendant, lobbying heavily for the project. In 2011, he joined Digital Domain’s board of directors, a post that paid $20,000 annually.

Many of the claims in the state’s lawsuit are mirrored in an inspector general’s report that was requested by Scott after Digital Domain’s 2012 bankruptcy. The timing of the formal legal action has many other speculating that politics could be a driving factor.

“The report has been out since 2013, why file the lawsuit now, one wonders,” Bremer said.

Along with allowing Textor and others to lobby him, the complaint says that Crist attended a 2007 party in Jupiter Island hosted by Sean Heyniger, a longtime friend of Textor. In a deposition as part of a separate Digital Domain lawsuit, Heyniger said he received a “success bonus” for introducing Textor to Crist, according to the lawsuit.

Brendan Gilfillan, a spokesman for the Crist campaign, called the lawsuit election year politics.

“The Scott administration should invest the same amount of effort in recovering some of the tens of millions of dollars in breaks they’ve given to big corporations for jobs that never materialized,” he said in an email.

There is no mention in the lawsuit of then House Speaker Larry Cretul of Ocala or then Senate President Jeff Atwater of West Palm Beach, both Republicans. Atwater is currently running for re-election as the state’s CFO.

The 2013 report shows that Crist sent both legislative leaders a letter discussing a handful of projects, including Digital Domain, before the projects were approved.

Bill Scherer, the attorney representing the state, said that he did not include legislative leaders, because he found no evidence that they were pushing for the projects. He said politics have nothing to do with the lawsuit.

“I’m in this to recover,” he said. “It’s what I do for a living.”

Reporter Isadora Rangel contributed to this report.

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