‘Girls Gone Wild’ Founder Sues IRS

After a long battle with the IRS, and pleading guilty to tax fraud, ‘Girls Gone Wild’ producer Joe Francis is now attempting to sue the IRS for illegally freezing his bank accounts. According to WebCPA.com, he asserts that since a judge approved his plea bargain his assets should not have been frozen.

Francis pleaded guilty in October to two misdemeanor counts of filing false tax returns, and in early November U.S. District Judge S. James Otero sentenced him to time served. Francis had been held without bail for nearly a year in the tax case. Under the plea deal, Francis agreed to pay restitution, back taxes and interest totaling $249,705, plus a fine of $10,000.

In addition, he agreed to plead guilty to two misdemeanor counts in exchange for having the charges dropped. Francis claims that his CPA, former Mantra Films CFO Michael Barrett, conspired with two others to embezzle millions of dollars from the company and then contacted the tax authorities in order to win a whistleblower award from the IRS.

However, shortly after the judge accepted his plea deal, the IRS filed a lien for $33,819,087.14 for three years of back taxes, from 2001 to 2003 (see IRS Files $34M Lien Against ‘Girls Gone Wild’ Founder).

Francis claims in his lawsuit that the IRS moved to freeze his assets within three hours after he left the courtroom, according to TMZ.com. He claims that the only circumstances under which assets can be frozen are if the taxpayer is preparing to flee the country, if the taxpayer is attempting to move assets out of the reach of the IRS, or if the taxpayer appears to be going bankrupt.

'Girls Gone Wild' Producer Sues Former Employees over Tax Evasion Charges

From the LATimes.com:

"Girls Gone Wild" empire founder Joe Francis is blaming his tax troubles on a trio of former employees in a new lawsuit.

The complaint, filed in Los Angeles Superior Court on Tuesday by "Girls Gone Wild" production company Mantra Films, alleges that the firm's former chief financial officer Michael Barrett, former head of technology Roman Pelikh and former vice president of operations Will L'Heureux defrauded Mantra and falsely accused Francis of tax evasion.

The lawsuit charges that the three formed their own company, WMR Marketing, and hid their involvement in it as they approved fraudulent invoices it submitted to Mantra worth nearly $500,000. It also claims that Pelikh submitted and obtained reimbursements for hundreds of thousands of dollars of fraudulent expense reports.

It claims that the three contacted the Internal Revenue Service to falsely accuse Francis of tax evasion, a charge for which he was indicted in 2007, in order to remove "the possibility that Francis could catch the ongoing fraud and theft." The trial for those charges will reportedly start in October. It's one of numerous legal problems in which Francis has found himself in recent years.

The lawsuit asks for at least $5 million in damages.

A person who answered a phone number listed for Pelikh hung up when contacted by The Times. Barrett and L'Heureux could not be located.

Joe Francis to Use "Deductions Gone Wild" Defense in Tax Evasion Trial

According to the Smoking Gun, via the Tax Prof Blog, Joe Francis, founder of the Girls Gone Wild video series, is going to use a slide show to try to convince a jury in his upcoming tax evasion trial that various expenses are deductible as business expenses. Check out the following explanation on his defense, or head over to the Tax Prof Blog to see pictures of the slides that Francis intends to use.

As part of Joseph Francis's opening statement in U.S. District Court in Los Angeles, his defense team will show a series of slides (or "opening statement demonstratives") that link the "Girls Gone Wild" boss and his firm to movie stars like Jennifer Aniston, Jack Nicholson, Vince Vaughn, and Orlando Bloom. A copy of the slide presentation was filed last week in federal court by Francis's defense team.

Prosecutors allege that Francis, whose trial is set to open in mid-October, illegally sought to conceal income in offshore companies and deducted millions in phony business expenses, including costs incurred at Casa Aramara, Francis's beachfront Mexican home. One defense slide ... includes photos of Aniston, ... Bloom, and Vaughn, who are described as "celebrity guests" at the Punta Mita property. It appears that Francis, 36, will argue that the estate was an investment property frequently leased to wealthy tenants and, as such, certain business tax deductions were warranted.

[One] slide will helpfully inform jurors that Francis is "in Business of Sex," while another provides a "Marketing 101" overlook at the "Girls Gone Wild" soft-core franchise. The defense slide show will also attempt to draw parallels between Francis's business and Hugh Hefner's Playboy empire.

"Girls Gone Wild" Creator Arrested In LA For Tax Evasion

Reuters recently discussed the arrest of Joe Francis, creator of the “Girls Gone Wild” videos, for tax evasion. A snippet of the article can be read below, but the full article can be read here.

"Girls Gone Wild" founder, Joe Francis, was arrested by U.S. marshals on Monday when he arrived five hours late to a court hearing over a request by his law firm to withdraw as his legal counsel in a tax case.

U.S. District Judge S. James Otero issued a warrant for Francis' arrest on Monday morning, when he failed to appear for the hearing at the set time, said Thom Mrozek, a spokesman for the U.S. Attorney's Office.

Francis finally arrived at the hearing in the afternoon, indicating he was suffering from the flu, and U.S. Marshals arrested him, said defense attorney Melissa Weinberger.

Weinberger said that she would try to have Francis released after he is processed.

Francis became a multimillionaire by selling the "Girls Gone Wild" videos of young women baring their breasts, usually at parties with free-flowing alcohol. He could not be reached for comment on Monday.

He is facing charges in a tax evasion case that was filed in 2007 by authorities in Nevada but transferred to L.A. because that is where he lives.

Francis is accused of failing to pay taxes on more than $20 million in business expenses. The tax trial is due to start in March. If convicted, he faces up to 10 years in prison.