‘Girls Gone Wild’ creator charged with tax evasion

RENO -- "Girls Gone Wild" creator Joseph Francis was indicted Wednesday by a federal grand jury on charges that his companies that sell videos of topless young women claimed millions of dollars in false business expenses.

The indictment came one day after Francis was jailed on criminal contempt charges in Florida.

The Nevada indictment alleges that Francis' companies, Mantra Films Inc. and its marketing arm, Sands Media Inc., claimed more than $20 million in false deductions on the companies' 2002 and 2003 corporate income tax returns, the Department of Justice said in a statement.

The indictment also charges that Francis, 34, of Incline Village used offshore bank accounts and entities purportedly owned by others to conceal income he earned during the same time.

It also alleges that he transferred more than $15 million from an offshore bank account to a brokerage account in Irvine, Calif., held in the name of Rothwell Limited, a Cayman Islands corporation controlled by Francis.

"The government has chosen to make a criminal case out of what we believe to be at most a civil tax dispute," said Jan Handzlik, a Los Angles attorney who is representing Francis in the Florida matter.

For 2002 and 2003, the government alleges Mantra overstated deductions by including more than $1 million for construction of a residence in Punta Mita, Mexico, as "false footage" and professional service expenses, and falsely claimed more than $1.9 million as insurance expenses.

Sands Media, which is incorporated in Nevada, claimed a combined $4.2 million in consulting expenses that were spent on construction of the home in Punta Mita, the government alleges, and $3 million in false insurance claims. The indictment also alleges Sands Media claimed $10.4 million in false consulting services expenses for 2002.

Francis reported taxable income for 2002 of $13.9 million and paid $3.5 million in taxes "when in truth and fact, he then and there knew well and believed that he had omitted additional income," the indictment said. For the following year, he paid $351,727 in taxes on reported taxable income of almost $1.16 million.

Justice Department officials said Francis is scheduled to appear May 22 before U.S. Magistrate Robert McQuaid.

The indictment is not related to Francis' legal troubles in Florida, where he was jailed Tuesday on a federal warrant for criminal contempt of court, said Charles Miller, a Justice Department spokesman in Washington, D.C.

"That has nothing to do with this," Miller said.

One of Francis' attorneys was skeptical.

"We are also disappointed about the timing of these charges in light of Joe's difficulties in Florida, Handzlik said. "This is turning into a litigation dog pile."

Francis was arrested in Florida after stepping off a privately chartered jet and ordered held without bail pending a hearing today before U.S. District Judge Richard Smoak, who issued the contempt citation.

Francis makes an estimated $29 million a year from videos of young women exposing their breasts and being shown in other sexually provocative situations.

He drew the contempt citation during negotiations in a Florida civil lawsuit brought by seven women who were underage when they were filmed by his company on Panama City Beach during spring break in 2003.

Lawyers for the women told Smoak that Francis became enraged and verbally abusive during settlement talks, and the judge ordered Francis to settle the case or go to jail.

Negotiations continued with a mediator, but talks broke down last week, and Smoak issued a contempt of court warrant.

Francis initially refused to surrender and called Smoak "a judge gone wild."