It is sometimes said that Hollywood is a cutthroat town. Hopeful actors, directors, producers, and other entertainment professionals put everything that they have on the line for a chance to make it big. When a payday finally does come, hopefuls turn to payroll companies to issue their checks. But as thousands found out in 2008, Axium, one of Hollywood’s largest payroll processing companies, was shutting down and leaving them holding worthless checks. Last week, Axium’s majority owner was convicted of several tax crimes, including tax evasion.
According to a Department of Justice press release, John Visconti, 74, of Beverly Hills, was convicted by a federal jury on counts ranging from tax evasion, to filing a false tax return, to conspiracy. The charges stemmed from Visconti’s role in Axium, a payroll services firm that went under in 2008.
Shortly after purchasing Axium in 2001, Visconti and Chief Operating Officer, Ronald Garber, 62, of Santa Monica, grew the company to become one of the largest and most successful payroll services firms in Hollywood. At its peak, Axium employed over 550 people and provided payroll services to celebrities, Fortune 500 companies and many of the large Hollywood studios. But it appears that the firm’s newly established success compelled Visconti and Garber to devise an elaborate scheme to funnel money out of the pockets of Hollywood employees and into their own.
According to prosecutors, Visconti and Garber caused payroll tax refund requests to be submitted to the IRS and state taxing authorities. When refunds were granted, they would often be in the hundreds of thousands of dollars. As taxing agencies started to catch on and issue deficiencies to Axium, Visconti and Garber attempted to cover as much up as possible until news broke that Axium owed more than $100 million to federal and state taxing authorities. Understandably, Axium’s lender foreclosed on its bank accounts, leaving it with no money to pay expenses, including the paychecks that employees and Hollywood professionals were issued.
Federal prosecutors alleged that the pair used the money that they had funneled out of Axium to pay for lavish expenses. Garber pled guilty to filing a false tax return earlier this year. Judge Jesus G. Bernal set sentencing for both men for early next year. Visconti faces a maximum sentence of 13 years in federal prison.
Although it was likely not a surprise to Visconti and Garber that their illegal activity would eventually catch up to them, this article is a reminder to those who run their own businesses, that the IRS takes tax evasion and the filing of false tax returns very seriously. In fact, when an IRS revenue agent uncovers potentially incriminating red flags during an examination, a taxpayer should act quickly to secure competent legal representation to ensure that the negative consequences of a civil audit-turned criminal investigation are minimized, if not eliminated.
A tax attorney who is also a CPA has the extensive tax technical knowledge to navigate event he most complex examination or litigation, but also possesses extensive legal training that is pivotal when interacting with IRS or state taxing authority investigators. Knowing the questions to answer and documents to produce (and those not to) can make or break your ability to walk away from an examination or criminal investigation successfully.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience representing a wide-range of taxpayers in their time of need. From individuals to small and medium-sized business owners, our professionals are ready to zealously advocate for your best interest. Don’t let tax troubles keep you awake at night. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.
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