Joe Francis free: Was he a victim of accountants gone wild?

In spite of a future that looked pretty dismal, “Girls Gone Wild” producer Joe Francis will not serve another day of jail time for tax evasion. The charges against him included underreporting his income by about $20 million, and later, bribing jail workers in Nevada while he was being held on the tax charges. For awhile it looked like he might end up with ten years in prison. Now, he's free, having been sentenced by U.S. District Judge James Otero to 301 days in jail -- which happens to be the amount of time he has already served -- plus a year of probation, and a quarter million dollar fine. In an unusual twist, just as Francis has worked out his IRS problems, the official spotlight has turned on the guy who blew the whistle on him. 

Francis's trouble started in 2005 when the Internal Revenue Service began looking into his tax returns for 2002 and 2003. His accountant, Michael Barrett, turned Francis into the IRS under the Whistleblower program, hoping to collect a multi-million dollar reward. Oddly enough, the information Barrett gave the IRS related to tax returns which he himself prepared, signed, and filed, without showing them to Francis. Barrett said the tax returns showed $20 million in bogus business expenses, including $3.78 million used to build a home in Mexico, $10.4 million in false consulting expenses, and a half million dollar phony insurance claim. In addition, Francis is accused of transferring $15 million from an offshore bank account to a California brokerage account in the name of a Cayman Islands Company under his control.
 
At first the video producer denied the charges and claimed the IRS was targeting him because they were jealous of his youth and enormous success. His defense attorney, Robert Bernhoff, told the Los Angeles Times, "This ain't 'Girls Gone Wild.' This is the IRS gone wild. The American taxpayers should be outraged that an IRS program is being abused like this."
 
Then, after years of fighting the charges, Francis appeared in a Los Angeles court on September 23, 2009 to plead guilty to two misdemeanors, agreeing to pay $249,705. Judge Otero accepted the plea bargain on the misdemeanor charges after it was learned that a key witness withheld information from prosecutors.
 
As part of the plea, Francis agreed to admit that he underreported income by about $563,000 and also that he gave more than $5,000 worth of items to two jail workers in exchange for food during his incarceration at Washoe County, Nevada.
 
Brad Brian, Francis's lead trial attorney, said in a statement, "It took us seven months, but in the end we demonstrated that the felony tax charges never should have been brought in the first place."
 
After the hearing, Francis kissed his mother and told reporters simply, "I think we won that one."
 
His tax woes may be over. But in recent weeks, the IRS is turning up the heat on his accountant, Michael Barrett. For a long time, Francis maintained that his tax failures were caused not by his own wrongdoing, but by Barrett. Barrett, in fact, was scheduled to be a key witness for the prosecution against Francis. But as the IRS delved more deeply into the case against Francis, some of the scrutiny turned on Barrett himself and two other employees of Francis's production company, Mantra Films. The accountant is accused - among other things - of setting up shadow corporations and then using them to bilk Mantra out of hundreds of thousands of dollars.  No arrests have yet been made.
 

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