It was a warm Southern California evening that second night of summer 2012 when California state Sen. Ron Calderon sat down for dinner with an indie producer and explained how he would threaten to let the state’s film incentives program “fall apart” in exchange for the bribe he’d just been offered to help the producer get what he wanted.
Calderon didn’t know it, but the producer sitting across the table from him was actually an undercover FBI agent, and this was part of an elaborate sting operation to uncover corruption in the state capitol. Last week, Calderon was sentenced to 3½ years in federal prison after pleading guilty to taking bribes that could have undermined the very tax-incentive program he’d co-authored back in 2009.
California’s $330M Film Incentives Are Working As Expected – And Then Some
It wouldn’t be the first time the government had used a movie company as a ruse. In 1979, the CIA famously set up a fake company called Studio Six Productions to rescue six American diplomats who were hiding out in the Canadian embassy in Iran during the Iran hostage crisis – an escapade immortalized in the Oscar Best Picture winner Argo. Ten years later, the FBI set up a fake film company in Santa Monica called David Rudder Productions that uncovered mob influence over Teamsters Local 25 in Boston, which has jurisdiction over studio drivers in New England.
Calderon, a Democrat who’d been under investigation since 2007, was a powerful figure in Sacramento who knew how to get things done – by hook or by crook. And on that balmy night in 2012, it would definitely be by crook. His dinner companion, who called himself Rocky Patel, claimed to be president of United Pacific Studios – a real movie company that was being used by the FBI as a front for the sting. Patel told Calderon that night he wanted the state senator to introduce an amendment that would make it easier for low-budget indie producers like himself to qualify for state film incentives. The existing law allowed films with qualified expenditures of $1 million to be eligible for tax credits, but Patel wanted the threshold lowered to $500,000. In return for the favor, he offered Calderon $60,000 in bribes.
Calderon told him it was doable. All he’d have to do is threaten his fellow legislators – and the Hollywood union leaders who’d fought so hard for the incentives that helped keep jobs in the state – with the prospect that he’d torpedo the entire program if he didn’t get his way.
“I can play poker and hold out,” he told the producer that night at a restaurant in Pico Rivera, his words secretly recorded and included as part of an affidavit in support of a warrant to search his offices. “And I’m the author of the bill. I’m not going to move the bill forward unless I get a deficit, period. Right? And be willing for it to fall apart, which it won’t.” And he’d do it, too, he explained, for the love of his children.
In the end, Calderon never managed to lower the incentives threshold, but if he had, it might have cast a shadow of corruption over the entire program and seriously jeopardized the chances of its expansion last year from $110 million a year to $330 million. It’s a cautionary tale about the public good being put at risk by private greed, and the need for vigilance when public funds can be held hostage to stuff the pockets of a corrupt politician.
But on that night in Pico Rivera, every crooked thing seemed possible. Calderon explained that lowering the threshold to $500,000 might face some push-back from his fellow legislators. After all, the entire purpose of the incentives program was to create more long-term, higher-paying film and TV jobs in the state, and slashing the threshold by half would open the program to more low-budget projects that tended to produced short-term, lower-paying jobs.
Calderon told Patel he could get it down to $750,000, but the producer still wanted to know if $500,000 was possible. “There’s a chance. There’s a shot,” Calderon said. “You know it’s a matter of where – what negotiating position I put myself in and how much they’re actually willing to give us.”
Summarizing their conversation, the FBI agent wrote in his affidavit that Calderon told Patel he felt he could get $750,000 through the Senate Committee, but that he would have to have a meeting with indie producers and labor leaders in the industry before the amendment got to the Assembly Committee so that he could let the labor leaders know he wanted to “lower it just a tad.” According to the affidavit, Calderon said he would have the meeting in his office and tell the labor leaders that if they want more regular work for their members they should get onboard with the legislation. Calderon then said he felt that if the labor leaders got on board, the “big guys” – presumably major film production companies – would not want to lose the entire bill “over that.”
In return for the bribe, Calderon wanted the producer to put his daughter, a budding filmmaker, to work at his studio. “One way you could be a real help to her is…you got any work? I think she’s a good investment. Any work you could find her would be well appreciated and you’ll appreciate her work. I told you, man, anything you can do, any help you could do for my kids is, you know, that’s diamonds for me. That’s diamonds.”
Calderon then told him that the tax credit legislation would be heard before the governance committee the following week, noting that “there might be a play, you know to lower the tax credit for movies.” According to the affidavit, Calderon then suggested he would be willing to hire the producer’s girlfriend – at taxpayer expense – if the producer would hire his daughter, since “it helps both of us.”
Calderon said his daughter could do any project the producer wanted done, but that she would need the flexibility to attend classes two days a week and do her internship at the Pacific Design Center two days a week. As for her salary, Calderon told him, “All I need her to do is make enough money to pay for the rest of her schooling, which isn’t a lot. It’s like two thousand, three thousand a year plus, so six thousand. And then buy her own insurance, which is about four hundred, five hundred bucks a month. If she could work two or three days a week for you and make, you know, twenty five hundred bucks a month. I mean you’d get your money’s worth out of her. She’s a workhorse. That would make all the difference in the world for her.”
The producer told Calderon he would be willing to hire his daughter during the remainder of her college, to which Calderon responded: “Oh, great!” All the producer needed, he told the senator, was to be able to tell his investors that the lower threshold for the incentives was going to happen “sooner rather than later.”
“Right,” Calderon told him, “Well, considering, that the committee and the chair, they don’t give a shit what the machinations are. They don’t care. It’s all about creating jobs, keeping the movie industry here in California, right?”
“Let me read the language and sit down with my staff,” Calderon told him. “And I can do this, you know, Monday, Tuesday, when I go back, and see what we can do to tweak the language so that I can make that play, and I know that it can happen.”
Fortunately for the industry and the tax incentives program, it did not happen; the changes for which Calderon took the bribes never found their way into law. But for his efforts, the affidavit states, the “producer” made nine $3,000 payments to Calderon’s daughter to work at his studio “even though she has never done any work” there; a $5,000 payment was made towards Calderon’s son’s college tuition; a $3,000 cash bribe was paid to Calderon himself, and a $25,000 payment was made to Californians for Diversity, a California corporation controlled by Calderon’s brother, former assemblyman Thomas Calderon, who last month was sentenced to a year in prison for laundering his brother’s tax incentives bribes.
Ron Calderon was arrested on February 24, 2014. No criminal charges have been brought against his children.
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