Florida accuses former Digital Domain Media officers of fraud

The state of Florida has filed a lawsuit against the former officers of Digital Domain Media, accusing them of defrauding the state and local governments out of $82 million.

Digital Domain Media was the former owner of the Venice visual effects company co-founded by James Cameron, who directed “Titanic” and “Avatar.”

The company filed for bankruptcy protection from creditors in September 2012 after incurring heavy losses and making a series of costly investments, including building an animation studio in Port St. Lucie that closed. The closing resulted in 280 layoffs.

Digital Domain also launched a new animation and digital arts institute in West Palm Beach, billed as a “pioneering public-private partnership” with Florida State University’s College of Motion Picture Arts.

To finance its Florida expansion, Digital Domain Media secured a $20-million grant from the state and an additional $62 million in funds from St. Lucie and Palm Beach counties.

In a lawsuit filed this week, the Florida Department of Economic Opportunity alleges that John Textor, the former chief executive of Digital Domain Media, and other officers misrepresented the California company’s steep financial losses, which exceeded $35 million from 2005 to 2008, and used grant money to pay off creditors.

The suit says Textor lobbied former Gov. Charlie Crist to support Digital Domain’s Florida expansion over the initial misgivings of Enterprise Florida, the state’s public-private economic development organization. It also alleges Textor enlisted the help of a state representative who was appointed to the company’s board of directors.

“The script had all the markings of a big-budget Hollywood blockbuster: greed, corruption, special effects, and a star-struck audience willing to suspend disbelief,” the complaint says. “In the real world, there was no Hollywood happy ending. The hero did not save the day. The villain was not defeated. Instead, the story ended with Florida taxpayers being cheated out of over $80 million dollars.”

In a statement, Textor denied any wrongdoing and called the lawsuit “politically motivated fiction” led by Gov. Rick Scott, a Republican who is in a tight race with Crist, a Democrat.

“The studio was built, the workers were hired, the state audited and confirmed that Digital Domain met all of the grant requirements,” Textor said. “Furthermore, after the bankruptcy, Governor Scott’s Inspector General conducted a thorough investigation and found no wrong-doing by me or any of those involved in awarding the grant.”

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