PORT ST. LUCIE, Fla. (CN) - Executives from special effects powerhouse Digital Domain duped Gov. Charlie Crist and other Florida politicians into awarding the company a $20 million grant as it descended into bankruptcy, Florida's Department of Economic Opportunity claims in court.
The Florida Department of Economic Opportunity sued former Digital Domain executives John Textor and Jonathan Teaford, et al., claiming they sidestepped the screening process for grant recipients and "illegally lobbied" for millions of dollars in government funding.
Textor and Teaford promised Digital Domain would bring high-paying jobs to Florida, but concealed the Academy Award-winning company's financial problems and misled Gov. Crist and the Legislature about how the grant money would be used, the state agency claims in a 71-page lawsuit in St. Lucie County Court.
The events described in the lawsuit stretch back to 2007, the year after Textor bought Digital Domain with the help of movie producer Michael Bay, who is not a party to the case.
Digital Domain had a long list of movie credits - "Titanic," "Fifth Element," and "Transformers," to name a few - but it was by all accounts carrying millions of dollars in corporate debt when Textor purchased it.
According to the lawsuit, Textor and his associates planned to form a new company in Florida with the Digital Domain name, so they could distance themselves from the corporate debt and have a clean balance sheet that would entice politicians to give them government funding.
"Florida has a system in place to ensure that grant applicants ... are scrutinized to prevent the State from being defrauded like this. At first, the system worked. Digital Domain Florida's proposal for a $20 million grant was rejected by Enterprise Florida, the State's public-private partner charged with vetting potential economic development projects," the lawsuit states.
So Textor made an "end-run" around Enterprise by "wooing then-Governor Crist and the Florida Legislature," according to the complaint. When he and Teaford met resistance in their pursuit of grant money, they "ran to legislators and Governor Crist complaining and lobbying," the lawsuit states.
"Textor's scheme found success because the high-level officials he courted ignored the warnings of agency professionals charged with protecting the State," according to the complaint.
In February 2009, a $6 million package for Digital Domain was approved, but Textor allegedly wanted more money.
Pushing for a larger grant, Textor garnered the help of defendant Kevin Ambler, a state House representative who "illegally received significant stock options" in the company, the lawsuit claims.
Ambler ramped up pressure to fund Digital Domain, and in the spring of 2009 he introduced a budget provision that allowed Digital Domain to circumvent statutory requirements for state funding, according to the lawsuit.
Ambler later took a position on Digital Domain's board of directors.
Crist and the Legislature approved the $20 million grant for Digital Domain as part of the 2009 budget.
From there, the supposedly debt-free corporation that Textor had been touting was merged with Digital Domain's debt-strapped California entity, and the grant money was exploited to stave off an imminent loan default, the lawsuit contends.