Federal prosecutors say the Seven Arts CEO submitted a false application to gain money to transform a Louisiana mansion into a post-production facility.

Seven Arts Entertainment CEO Peter Hoffman has been charged by federal prosecutors with committing wire fraud in connection to $1.13 million given to him by Louisiana.

According to an indictment lodged in Louisiana federal court against him and partner Michael Arata, the two looked to take advantage of a state motion picture incentive program. Under Louisiana's tax credit system, qualified individuals receive 40 percent of expenditures.

Hoffman and Arata allegedly gained money after convincing authorities they were going to transform an old mansion at the edge of the French Quarter, which had fallen into a severe state of disrepair, into a film post-production facility. But now, prosecutors say the defendants filed a "materially false and misleading" film infrastructure tax credit application "when, in truth and in fact, the expenditures had not been made as claimed."

Hoffman currently heads Seven Arts, which has invested in a series of mid-budget films including Rules of Engagement, An American Rhapsody, The Believer, and Who is Cletis Tout?

Over the years, Seven Arts has experienced financial trouble including liquidation and a NASDAQ de-listing. The company has also fought a long-running battle with Paramount Pictures over rights to several films.

Despite that, Hoffman is known as an important middleman between Louisiana tax breaks and film companies.

This isn't the first time that Hoffman has been charged with fraud.

Before Seven Arts, Hoffman was president and chief executive of Carolco Pictures, which produced such films as Terminator 2, Basic Instinct, Total Recall, Showgirls and Cutthroat Island.

At the time in the mid-1990s, Hoffman was indicted on four felony tax fraud charges for understating his income to the IRS. At the time, it was reported that the government was seeking his cooperation in a tax fraud probe of other movie producers. Hoffman eventually pleaded guilty to a misdemeanor for failing to report payments from Carolco that he believed had been offset by legitimate business expense deductions.

Hoffman's spokesperson declined comment. A press statement from his office will be coming soon.

E-mail: Eriq.Gardner@THR.com

Twitter: @eriqgardner