Digital Domain Case Moved from Bankruptcy Court to State Court

Digital Domain, the Florida-based visual effects company that gave the world Titanic, The Curious Case of Benjamin Button, and a Tupac hologram, filed for Chapter 11 bankruptcy recently. This after Port St. Lucie officials gave the company a $40 million bond issue and West Palm Beach officials gave it f 2.4 acres of downtown property, and the promise of a $15 million loan.

Problem was, Digital Domain Chairman and Chief Executive John Textor's finances were not up to snuff, and the whole thing ended up collapsing in on itself. That's when the state stepped up and sued the company, pretty much calling the movie-special-effects company a Ponzi scheme.

On Wednesday, a judge announced the case would be moved from bankruptcy court in West Palm Beach back to state court.

See also: Florida Still Feeling the Fallout of Digital Domain Collapse

In a press release, Gov. Rick Scott called the judge's decision a victory in the fight to restore money back to the state's taxpayers.

"Ever since the Inspector General determined that the Digital Domain deal for $20 million in state money was improperly awarded to a now bankrupt company after bypassing our existing protocols and safeguards, we have vowed to get this money restored to Florida," Scott said. "Yesterday's decision is another step forward in this effort."

Digital Domain, which was originally headquartered in California, used the money given to it from Florida to create high-paying jobs without any real financial security. As a result, the company soon defaulted on its debt at the same time the state was funding its grant request.

The state of Florida gave Digital Domain $20 million.

In July 22, the State of Florida, via the Department of Economic Opportunity, filed suit against Digital Domain to recover funds that were stolen by the company.

In September, Digital Domain had filed a notice of removal to have the case against them moved into bankruptcy court. Then, in October, a hearing was held in the Southern District of Florida to determine that having the case moved from bankruptcy was valid.

Also in October, the Department of Economic Opportunity announced that the state would be looking to get back $18 million in tax credits give to Digital Domain.

On Wednesday, the judge said he would remand the case back to state court where Department of Economic Opportunity could keep going after the money owed to the state.

William Scherer, outside council to Department of Economic Opportunity, said depositions to get the ball rolling on the recouping of monies is already underway.

"Now that we're back in Florida court, the wheels of justice will move with greater purpose, and we'll force those who plotted and succeeded in funneling millions of dollars in taxpayer money to a defunct company to explain themselves under oath," Scherer said via a press release. "We look forward to getting this process underway, and we're beginning to schedule depositions for those in the previous administration who circumvented protocols to profit Digital Domain at taxpayer expense."

Meanwhile, Digital Domain is going to give back $18 million of the $20 million in tax credits it was given, according to the Florida Department of Economic Opportunity.

Send your story tips to the author, Chris Joseph. Follow Chris Joseph on Twitter

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