John Visconti, former head of Hollywood payroll company, arrested in tax fraud

The former chief executive of a Hollywood payroll services company that imploded in 2008, costing hundreds of employees their jobs and sticking thousands of entertainment industry workers with worthless paychecks, has been indicted on federal tax charges.

John Visconti, 71, was arrested Monday by agents with the Internal Revenue Service’s criminal investigations unit, according to the U.S. attorney’s office in Los Angeles.

The Beverly Hills resident, who owned about 90% of the failed Axium International Inc., pleaded not guilty the same day to conspiracy, tax evasion and filing a false tax return. He was released on $100,000 bond and will be subject to electronic monitoring pending a July 29 trial date, prosecutors said.

Visconti and another man identified in the indictment only as Axium’s former chief operating officer are accused of diverting to themselves millions of dollars in clients’ tax refunds — and concealing the money from the IRS. They are alleged to have used various means, including secret bank accounts, weekly cash payments to themselves and a construction consulting firm that billed Axium for $570,000, prosecutors said.

Thom Mrozek, a spokesman for the U.S. attorney’s office, confirmed that the chief operating officer was Ronald D. Garber, who pleaded guilty in September 2011 to two counts of filing false returns for his role in the scheme. Garber is to be sentenced in September and faces up to six years in prison.

Neither Visconti nor Garber, who owned the remaining 10% of the business, could be reached for comment Tuesday.

Visconti’s attorney, Alexander Petale, said his client, who faces up to 13 years in prison, has done nothing wrong.

“I am shocked that the U.S. attorney’s office would make efforts to indict an innocent man.... He is simply not guilty,” Petale said.

Visconti, whose eclectic businesses have included cosmetics, gourmet coffee beans and offshore banking, bought Axium for $4 million in 2001, the Los Angeles Times reported in 2008. He grew it into one of the top three companies of its kind, with about 550 employees and offices in Los Angeles, New York and London.

Visconti, an Iranian immigrant with an adopted Italian surname, had by all accounts wrung substantial wealth from the company, which processed payrolls for major studios and independent productions. Axium and its staffing subsidiary, which supplied contract workers to Fortune 500 companies and others, abruptly ceased operations in January 2008 and filed for bankruptcy.

A week later, an asset management firm that had lent Axium $130 million sued Visconti and Garber. Among other things, the lawsuit alleged that they used pilfered funds for an Aston Martin, a Rolls-Royce Phantom, private jet flights, vacations, jewelry, political contributions and legal fees for their divorces.

Visconti was arrested at Los Angeles County Superior Court, where he was tending to a divorce matter, authorities said.

kim.christensen@latimes.com