Producer Cleared of 2 Fraud Counts; Trial Continues

Film producer Peter Hoffman was found innocent Monday on two counts in his federal tax fraud trial by a jury in Los Angeles that will continue deliberating today on two remaining counts.

The jury cleared Hoffman of filing and signing false tax returns for 1993 for himself and his production company, CineVisions.

Still being deliberated is whether Hoffman filed and signed a false return for 1989.

Jurors late Monday informed U.S. District Judge John Davies that they had reached decisions on two counts but were still split on the others. Davies ordered them to return for further deliberations at 9 a.m. today.

Hoffman is accused of tapping money from a deferred-compensation account to avoid taxes while he worked as chief executive of Carolco Pictures, producer of such films as the Rambo series, “Terminator 2: Judgment Day” and “Total Recall.”

In its trial documents, the government described Hoffman’s explanation of the payments as loans as “a sham to justify his receipt of over $1 million in tax-free income.” Prosecutors alleged that he avoided paying taxes on about $400,000 in taxable income in 1989. Hoffman alleged that the taxes weren’t paid because of a Carolco accounting error.

Hoffman’s trial is significant because, sources have said, prosecutors would like to prod him into cooperating in a much larger criminal tax fraud investigation case against two of his former Carolco colleagues, film producers Mario Kassar and Andy Vajna. If Hoffman is ultimately acquitted on all counts, people close to the cases believe, it could deal a serious blow to that investigation.

Hoffman, a lawyer, is considered one of Hollywood’s top experts in the field of foreign film financing.

During the trial, Vajna testified that he has lent Hoffman about $400,000 to help pay for his defense.