The criminal charges continue to pile up in the Hangar42 film studio scandal, highlighting the skewed incentives created by government programs that grant favors to a selected few. After the Mackinac Center began exploring the suspicious film studio deal in Walker, Mich., the media and state joined the investigation. On Jan. 25, 2011, Michigan Attorney General Bill Schuette filed two counts against the developer of Hangar42, which was housed in a former Lear plant. Then-Attorney General Mike Cox filed a felony fraud charge against the alleged seller in August 2010.
Neither criminal case may have ever seen the light of day if not for the vigilance of Center Fiscal Policy Director Michael LaFaive and Communications Specialist Kathy Hoekstra. In early 2010, they discovered the studio may not have been worth the widely reported $45 million, as it had previously sat on the market unsold at a listing price of less than $10 million. In video and print, the pair made their questions public, which ultimately led the Attorney General to charge the developer and seller with purposely inflating the selling price four-fold to get a bigger payout from the state of Michigan’s film infrastructure tax credit.
Another case stemming from the scandal continues to wind its way through the courts. A group of unpaid contractors has brought a civil lawsuit against the owner of the property. Hangar42, meanwhile, is reportedly back on the selling block.
In exposing this deal, Hoekstra and LaFaive have helped to demonstrate how state economic development programs should be made more transparent or even eliminated.
For Hoekstra’s video exposing the Hangar42 deal, go to www.mackinac.org/12804.