AG plans to consolidate Hanger 42 court cases

February 18, 2011
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Michigan Attorney General Bill Schuette wants to consolidate the Hangar 42 film studio case against two defendants the state has separately charged with fraud. But Schuette won’t be able to file a motion that would let his office prosecute both defendants at the same time until preliminary examinations are held for both and a judge determines that the state has enough evidence in both cases to go forward with a consolidated trial.

“After they have their preliminary exams, if Judge (David) Buter finds probable cause, the defendants will be bound over for trial at the 17th Circuit Court, which is Kent County, and the case would go to Judge (Dennis) Leiber. At that point, we will file a formal motion to consolidate the cases,” said Joy Yearout, communications director for the attorney general’s office.

Preliminary examinations were scheduled for Feb. 3 for both defendants: Jack Buchanan Jr. and Joseph Peters. But 61st District Court Judge David Buter postponed both hearings.

“The judge adjourned the preliminary exam scheduled earlier this month in order to give (Buchanan) time to hire an attorney,” said Yearout.

Schuette filed two felony charges against Buchanan Jan. 25, just eight days prior to his hearing date. Former Attorney General Mike Cox, Schuette’s predecessor, charged Peters with one felony on Aug. 2, 2010 — six months before his preliminary exam was scheduled.

In short, both defendants have been accused of trying to defraud the state of $10 million.

“The court informally agreed to hold their preliminary exams at the same time, so Mr. Peters has not had his preliminary exam yet. They are going to have it at the same time, and that’s an informal agreement right now,” said Yearout.

“When we charge someone, there is a preliminary exam at the district court level to determine if there is probable cause to believe that a crime was committed. If the judge does agree with us, the defendant is bound over for trial in circuit court,” she added. “We don’t have a date (for the preliminary hearings) right now because the judge adjourned it until Mr. Buchanan secured counsel, and it was sort of left that he would contact the court when he had counsel and they would set a date.”

The case revolves around the market value of a section of the former Lear plant at 2150 Alpine Ave. NW in Walker. Buchanan, who bought the entire 41-acre Lear site with his attorney father, John Buchanan, in 2006, sold about 450,000 square feet of the plant to Peters last February for the Hangar 42 film studio.

A published listing had that portion of the plant’s value at just under $10 million, while Peters reportedly bought it for $40 million on a land-contract agreement. Peters then filed with the Michigan Film Office for a $10 million film-tax credit. The credit returns 25 percent of an investment that a film production studio makes as an incentive to set up shop in the state.

The defendants claimed they have appraisals that establish the sale value at $40 million if the property is used as a film studio. Yearout told the Business Journal her office knows who wrote the appraisals, but she also said she couldn’t reveal the names of the appraisers.

With the property located in Walker, which is home to the 59th District Court, the Business Journal asked why the preliminary exams are being held in Grand Rapids’ 61st District Court.

“The proper venue for a criminal case involving two or more separate acts is one of the locations where an act occurred. Our office charged this case in Grand Rapids because that is the location where Peters and Buchanan signed the false document (memo of land contract), which they hoped to use to obtain the tax credit. While the studio is located in Walker, the acts which constitute the elements of the crime did not occur there,” said Yearout.

Should Buter find enough evidence for the case to go forward, and if Schuette is successful in trying both defendants at the same time, a court date would be set in the county’s 17th Circuit Court. Exactly when a trial would be held is anyone’s guess at this point. Yearout said there isn’t a standard timeline for a case such as this one.

“It’s driven by the court, as the courts all have their own timelines,” she said. “It’s also driven by the evidence and by how many motions are filed — those also affect the timeline. It’s not something that can be predicted.”

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