‘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.

Feds Sue Colorado Tax Preparer, Alleging $55M in Bogus Refund Claims

From Bizjournals.com:

The U.S. Justice Department has sued a Colorado tax preparer, alleging he made at least 141 claims for fraudulent refunds for clients totaling more than $55 million.

In the civil complaint filed Tuesday in U.S. District Court in Denver, federal authorities seek an injunction barring Curtis L. Morris of Elizabeth, and his company, Numbers and Beyond, from preparing and filing tax returns.

Morris has not been charged with a crime.

According to the complaint, Morris filed fraudulent refund claims on behalf of clients in Colorado, California, Arizona, and New Mexico in 2008 and 2009.

It says the returns Morris prepared for the customers "fabricate the amount of federal income tax withheld," and that he sometimes filed false Forms 1099-OID with the IRS to support fraudulent claims.

"In reality, Morris' scheme fraudulently reports that tax was withheld on behalf of his customers and then claims refunds based on that non-existent withholding," the complaint said.

One bogus refund request totaled $1.7 million, the complaint says. Officials said the IRS issued $1.9 million in erroneous refunds as a result of Morris' filings.

'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.

Wells Fargo Sued Over Home Equity Lines of Credit

This morning I was surprised when I came across this new Associated Press article reporting that the popular U.S. bank Wells Fargo & Co. has run into some legal trouble. According to the lawsuit, Wells Fargo has been accused of illegally reducing the size of customers’ home equity lines of credit. Check out the full story below.

The suit, which was filed in Illinois, claims Wells Fargo failed to accurately assess the value of customers' houses before deciding to cut the size of their credit lines. San Francisco-based Wells Fargo is being accused of using unreliable computer models that wrongly valued home prices too low to justify cutting the size of customers' loans.

Home equity lines of credit are similar to credit cards in that a customer has a credit limit and can continue to borrow money until the limit is reached. Once a portion is paid off, it again becomes accessible to borrow. But, home equity lines of credit are backed by a borrower's property, whereas credit cares are unsecured.

Michael Hickman, who filed the lawsuit on behalf of himself and is seeking class action status for it, claims Wells Fargo also did not provide proper notice that the bank was reducing the size of the credit lines.

The bank's notice for reducing the lines also did not specifically provide a new estimated value for the property or the method used to determine the houses value. Hickman's lawsuit said that information was needed so a customer could challenge the change in the credit limit and try and reinstate the previous limit.

Hickman is being represented by KamberEdelson LLC, a Chicago-based law firm, which is also representing clients that have filed similar suits against JPMorgan Chase & Co. and Citigroup Inc.

Continue reading here…

Embarq, Sprint Sue Government Over Taxes

From the Associated Press:

Embarq Corp. and its former corporate parent, Sprint Nextel Corp., have sued the federal government to recover $31.6 million in income taxes.

The two companies filed the lawsuit Wednesday in Kansas City, Kan., federal court. The complaint claims Sprint paid the taxes by mistake in the 1990 through 1994 tax years.

Sprint said it mistakenly included subsidies its local telephone division received from the Universal Service Fund as taxable income. The fund helps defray the cost of running lines to rural and poor areas.

The Internal Revenue Service denied Sprint's refund requests, which were filed in 2004.

Sprint's local division spun off in 2006 to become Embarq, which would receive any refunds.