Raunch mogul denies charges

Times Staff Writer

"Girls Gone Wild" video mogul Joe Francis denied felony tax evasion charges Monday in Los Angeles, claiming that he was a victim of abuses in an Internal Revenue Service whistle-blower program.

In a brief hearing at U.S. District Court in Los Angeles, Francis, 35, pleaded not guilty to charges that he deducted more than $20 million in phony business expenses on his corporate returns during 2002 and 2003, and trial was set for Sept. 16 in Los Angeles.

The founder of the soft-porn video empire was indicted in April 2007 in Reno before the case was transferred to make it more convenient for witnesses.

"No matter how much the government pursues me because of what I do for a living, I will be vindicated again because ultimately the truth will come out," Francis said Monday in an interview outside the courtroom.

Thom Mrozek, a spokesman for the U.S. Justice Department, said Francis "concealed millions of dollars in income" in violation of federal tax law and disputed the contention that Francis was being persecuted because of his line of work.

"This case results from his criminal conduct and not from any other motivation," Mrozek said.

The government alleges that Francis used various offshore companies and nominee signatories on bank and brokerage accounts to conceal much of his income during the two-year period.

His attorney, Robert Bernhoft, said a former corporate accountant for Francis' Mantra Films Inc. of Santa Monica and Sands Media Inc. of Nevada prepared the returns without showing them to Francis.

After leaving the companies, the accountant contacted the IRS seeking millions of dollars in bonuses for reporting his own "accounting mistakes," Bernhoft said, under a government whistle-blower provision nicknamed "the rat-out-your-neighbor program."

Under the program, informants can collect 15% to 30% of the money eventually recovered from tax cheats by the government, including penalties and interest.

"This ain't 'Girls Gone Wild.' This is the IRS gone wild," said Bernhoft, who defended Wesley Snipes in Ocala, Fla., this year when the action film star was acquitted of tax fraud and conspiracy charges but convicted of three misdemeanor counts of failing to file tax returns.

"The American taxpayers should be outraged that an IRS program is being abused like this," Bernhoft said.

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josh.friedman@latimes.com

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