Film Producer’s Tax Fraud Case Ends in Mistrial

Jurors in the federal tax fraud trial of movie producer Peter M. Hoffman failed to reach a verdict Tuesday on two final counts. They cleared Hoffman earlier in the week on two other charges.

U.S. District Judge John G. Davies in Los Angeles declared a mistrial after concluding that jurors were deadlocked on the last two counts. Those counts involve government allegations that Hoffman filed and signed a false tax return for 1989. On Monday, jurors acquitted Hoffman on two similar charges for 1993 business and personal taxes.

Prosecutors had alleged that Hoffman evaded taxes by tapping into a deferred compensation plan and calling the payments loans while he was chief executive of film production company Carolco Pictures. Hoffman says that the loans were repaid and that any taxes that went unpaid were due to Carolco accounting mistakes.

Hoffman’s attorneys, who polled the jurors after the mistrial declaration, said that nine were in favor of acquittal, two in favor of guilt and one undecided.

The government’s failure to convict Hoffman puts a dent in an ongoing larger criminal tax fraud investigation into Hoffman’s former colleagues at Carolco, producers Mario Kassar and Andrew G. Vajna.

Sources have said that prosecutors had been hoping to use the leverage of a criminal conviction to get Hoffman to cooperate in the investigation of Kassar and Vajna. Prosecutors have been investigating tax matters involving Kassar and Vajna and the system of byzantine offshore companies they used at Carolco, the film production company responsible for such big-budget hits as “Terminator 2: Judgment Day,” “Total Recall” and the “Rambo” series.

Prosecutors are expected to decide over the next three weeks whether to file charges again. A court hearing on the status of the case is scheduled for Oct. 27, at which time prosecutors are expected to announce their decision. Hoffman’s lawyers plan to ask that Davies dismiss the charges. The charges can be filed again, dropped by prosecutors or dismissed by a judge.

Hoffman attorneys Thomas Pollack and Brian Hennigan said they believe the acquittal on the two counts, combined with the tilt by the jurors toward acquittal on the other two counts, does not bode well for a new filing of charges.

“We feel pretty good about it. There is a good chance they drop the charges or that the judge kicks the case out,” Pollack said.

Prosecutor Monica Bachner declined to comment.