Among the incriminating evidence the Federal Bureau of Investigation has on Gary Howsam is surveillance footage of the former Peace Arch Entertainment CEO with a knife in his hand.

A steak knife. Possibly covered with sour cream and chives, though on this point a 16-page affidavit from FBI special agent Jennifer Teasedale, filed in court after Howsam’s Nov. 5 arrest, is silent.

The affidavit does, however, detail a Nov. 2 dinner at Charlie G’s steakhouse in Tarzana, CA between Howsam and Harel Goldstein that reads like one of the thriller scripts the Peace Arch exec – currently on administrative leave from the prodco – made during a 25-year career in Canadian film. Goldstein, an Israeli military officer before setting up shop in Los Angeles as a film sales agent, helped Howsam make the Vietnam War drama Going Back in 2001, as well as a series of other genre pictures.

Unknown to Howsam that night, according to the affidavit, Goldstein wore an FBI-supplied wire during the chop-house sting that led to the arrest of the Toronto producer for allegedly attempting to defraud the Comerica Bank of California during dealings in 1999 and 2000.

In full view of his FBI tail, Howsam allegedly lost his cool when Goldstein told him Comerica had found the originals of allegedly bogus distribution deal contracts the pair offered the bank in April 2000 as collateral to secure a loan for Going Back.

The agent’s affidavit says that, when told by Goldstein that Comerica aimed to send said contracts to the lab, Howsam scoffed, ‘They don’t have my fingerprints, anyway.’

Howsam is also said to have claimed the duo had cleaned up ‘every bloody shred’ of the mess caused by those contracts, saying they ‘rolled it all up, put it in a bag, and took it away… It’s gone.’

The FBI allegations, untested and unproven in court, state that Howsam and Goldstein used scissors, whiteout and a photocopy machine to forge signatures from legitimate distribution contracts to create false contracts to secure around $7 million in film financing from Comerica. The Dallas-based bank had launched a civil lawsuit against Howsam and other parties in 2004, and the FBI investigation grew out of that.

To be sure, in the annals of Canadian fraud and fakery, Howsam’s alleged deceit would be small potatoes.

Livent’s Garth Drabinsky, soon to go on trial for allegedly cooking the company books, and Hollinger’s Conrad Black, recently convicted of mail fraud, have earned far more ink.

And who can forget Cinar, which the RCMP probed for allegedly replacing the names of American TV writers with those of stand-in Canadians to secure lucrative Cancon subsidies.

But there’s a common thread here: allegedly using paperwork to deceive investors.

The FBI says that Howsam’s alleged fakery was prompted by $3.5 million in financing for Going Back suddenly falling through days before he was to produce deal memos to Comerica to secure a loan agreement.

At that point, the FBI claims, Howsam and Goldstein got creative, falsifying contracts to convince Comerica they had a mix of international distributors that pre-bought rights to Going Back.

Without the proper paperwork, the U.S. feds say, Howsam knew there would be no loan from Comerica, and no Going Back.

This month’s crash landing for a once high-flying Peace Arch exec illustrates that a Canadian industry that prides itself on being driven by an eclectic mix of directors and subject matter is, more accurately, sustained by paperwork.

Distribution guarantees, tax credit applications and financial statements are the grease on which this industry glides, by allowing investors to weigh financial risk.

The recent arrest also raises troubling questions about a Canadian industry that’s too often reluctant to investigate and prosecute when sideswiped by supposed fraudsters.

Canadians instead ostracize alleged offenders and change the subject, only to later witness the U.S. Calvary ride in to make arrests.

Howsam remains free on bail in Los Angeles, where he is staying with friends and must wear a monitoring device. An indictment returned by a Los Angeles grand jury found there was enough evidence to accuse him of the alleged financing scam. This comes ahead of his Dec. 3 formal arraignment, where he will be asked how he pleads on the one charge of bank fraud before him. Donald Randolph, Howsam’s lawyer in Los Angeles, was not available for comment by press time. If convicted, Howsam faces up to 30 years in Club Fed.