UPDATED, 1:47 PM: A federal judge has denied Seven Arts Entertainment founder Peter Hoffman’s motion to dismiss the fraud charges against him stemming from $1.13 million he obtained in Louisiana tax credits to refurbish a run-down old New Orleans mansion and turn it into a state-of-the-are postproduction facility. Hoffman declined comment until he’s had time to study the judge’s 27-page ruling. A trail is set for January 20.

peter-hoffman-seven-artsPREVIOUSLY, June 2: The founder of Seven Arts Entertainment claims that he did nothing wrong in obtaining tax credits to restore a rundown New Orleans mansion and convert it into a modern postproduction facility. Peter Hoffman has filed a motion to dismiss the criminal tax fraud charges (read it here) brought against him by the U.S. Attorney’s office in Louisiana in February. The 22-count indictment accuses Hoffman, a former business partner, and Hoffman’s ex-wife, producer Susan Hoffman, of conspiring to secure $1.13 million in Louisiana tax credits without having done the work they told state officials they were going to do. All three have pleaded not guilty to the charges.

Related: Peter Hoffman Says He’s Being “Targeted” By Federal Prosecutors In Louisiana Film Tax Fraud Case

At the center of the case is a once-elegant three-story mansion at 807 Esplanade Avenue in the French Quarter that had been abandoned for years and had fallen into a severe state of disrepair before it was purchased by Seven Arts in 2007. After major repairs and restoration, it reopened as Esplanade Studios in July 2012. Federal prosecutors charged the Hoffmans with filing “materially false and misleading film infrastructure tax credit applications and supporting documents” with the state of Louisiana “that fraudulently claimed that certain expenditures had been made relative to 807 Esplanade when, in truth and in fact, the expenditures had not been made as claimed.” The indictment charges that in order to conceal their alleged fraud from state auditors, the trio “conducted circuitous bank transfers to create the appearance of payments” for construction work that was never done and for film equipment that was never purchased.

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In a 40-page motion for dismissal, filed in U.S. District Court in New Orleans, the Hoffmans argue that neither the law nor the facts in the case warranted charges of fraud and conspiracy. “These tax incentives have successfully led to the development of a thriving television and motion picture industry in Louisiana, aka ‘Hollywood on the Bayou,’ which ranks behind only California and New York as a site for the production of movies and television programs,” the motion states. It notes that the Hoffmans, through their company Seven Arts Pictures Louisiana (SAPLA), fulfilled the quid pro quo for seeking infrastructure tax credits under Louisiana law by making substantial investments to restore a rundown property in Louisiana and creating a production and postproduction facility that has been operating since July 2012.

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The Hoffmans’ motion also states that “the government fails to allege how seeking tax credits for expenditures that SAPLA was contractually obligated to pay, and that a Louisiana state agency expressly certified were made, could conceivably amount to fraud. The law does not permit the government to impose criminal liability on the Hoffmans by relying on its own after-the-fact interpretation of Louisiana tax statutes.” The Hoffmans also argue that the scope of Louisiana’s film tax credit statute is so vague and unclear that the government cannot charge them with violating it. “It is settled that when the law is vague or highly debatable, a defendant lacks the requisite intent to violate it.”