New Orleans. (Photo: Shutterstock)

Disciplinary officials have recommended disbarment with a chance for reinstatement in the case of an attorney from a prominent New Orleans legal family who was convicted of tax fraud in connection with the city's efforts to become a film industry hub.

In May the U.S. Supreme Court declined to hear an appeal in the so-called "Hollywood South" case, despite amicus backing for the lawyer and his movie producer co-defendant that pulled in support from Sidley Austin, William & Connolly and other Big Law firms.

Michael Arata was found guilty four years ago alongside Hollywood producer Peter Hoffman and Hoffman's wife Susan of improperly using $1 million in state tax credits for renovating an old French Quarter mansion into a film production facility.

Arata has a background as a stage and film actor, and has also worked in film and theater production in addition to his legal career. His father, Blake Arata, was a prominent oil and gas lawyer who served as New Orleans' city attorney in the 1970s.

In electing to recommend disbarment over permanent disbarment in its Dec. 5 findings and recommendations, the Louisiana disciplinary board pointed to the absence of prior disciplinary actions and reports of misconduct against Michael Arata. The state's Office of Disciplinary Counsel had sought a permanent disbarment.

"Applying the [Louisiana] Supreme Court guidelines, there does not appear to be grounds to recommend permanent disbarment," the board concluded.

If affirmed by the Louisiana Supreme Court, the board's recommendation will allow Arata to apply for readmission to the bar in the future.

The Hoffmans and Arata were convicted in 2015 for misusing a Louisiana tax credit law intended to bring more movie productions into the state. The French Quarter facility was completed and opened, and some of the tax credits were found to be legitimate. The three defendants had argued that they submitted credit documents in good faith under a tax credit law that some observers, at the time, considered ambiguous and complex.

The trial judge threw out most of the counts against the defendants, but he denied their motion for a judgment of acquittal. He sentenced the three to probation in a dramatic downward departure from sentencing guidelines. He noted he was constrained by precedent in the U.S. Court of Appeals for the Fifth Circuit that rejects the so-called equipoise rule, where a person's guilt and innocence are equal.

Last year the Fifth Circuit reinstated most of the counts and remanded the case for resentencing. That prompted the defendants' unsuccessful Supreme Court appeal, in which they were represented by Jeffrey L. Fisher of O'Melveny & Myers.

Three amicus briefs from highly pedigreed advocates—one from more than a dozen former federal trial judges, represented by Sidley Austin partner Christopher Egleson; another from nine criminal law professors, represented by Timothy O'Toole, a partner at Miller & Chevalier; and the third from the National Association of Criminal Defense Lawyers, represented by Williams & Connolly partner Amy Saharia—were not enough to persuade the justices to hear the case. They denied the defendants' cert petition in May, prompting the Louisiana Attorney Disciplinary Board to turn to the question of disbarment.

Arata could not immediately be reached for comment. He and the Hoffmans are now set to be resentenced Jan. 8.

Information on the identity of Arata's counsel for the disciplinary proceeding was not available. His criminal attorney, William Gibbens of Schonekas, Evans, McGoey & McEachin, did not immediately respond to a request for comment Wednesday.

[Hat tip: Mike Frisch of the Legal Profession Blog.]

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