RIVERSIDE, California – The former CEO of Axium International, Inc., a leading Hollywood payroll services company until its 2008 collapse, was convicted late yesterday afternoon of tax evasion, conspiracy to defraud the IRS, and filing a false tax return.
John Visconti, 74, of Beverly Hills, was convicted by a federal jury following a one-week trial. United States District Judge Jesus G. Bernal, who presided over Visconti's trial, set sentencing for Visconti on January 23, 2017.
Axium was one of the largest payroll services companies serving the entertainment industry, and its clients included a list of high profile studios, Fortune 500 companies, television and cable companies, and media outlets. At its height, Axium's gross revenues were well over $1 billion per year.
As the payroll services provider and employer of record for its client entities, Axium regularly submitted payroll tax returns to the IRS and to the taxing authorities of several states. In several instances, those tax returns generated refunds in six-figure dollar amounts. Axium collapsed in 2008, after revelations that its tax delinquencies exceeded $100 million and that, as a result, Axium's lender foreclosed on its bank accounts. Axium's tax delinquencies resulted in the IRS assessing a recovery penalty against Visconti of $15 million.
According to the evidence at trial, Visconti and Axium's former chief operating officer, Ronald Garber, 62, of Santa Monica, used a variety of elaborate mechanisms to divert approximately $5.1 million from Axium during the period 2005-2007, and Visconti took an additional $1.9 million in corporate loans that he did not repay. In one of the schemes, Visconti diverted tax refund checks payable to Axium and its subsidiaries into “shadow bank accounts,” accounts that were in the names of Axium companies but controlled by Visconti and Garber, off the corporate books and records, and not disclosed to the Axium accounting department. Garber and Visconti also diverted over half a million from Axium through a scheme involving a sham construction company that invoiced Axium for purported services. The two men also conspired to have thousands of dollars in cash from Axium delivered to them on a weekly basis.
The various schemes presented during the trial resulted in the diversion of millions of dollars from Axium, and Visconti reported none of the funds pocketed by him on his federal income tax returns. Visconti in several instances arranged for his “cut” to be paid to bank accounts held in the names of entities that Visconti controlled.
“This defendant and his co-conspirator stole millions from Axium over the course of many years and failed to pay taxes on those amounts,” said United States Attorney Eileen M. Decker. “His conduct victimized not only the employees of Axium who lost their livelihoods when the business collapsed, but all American taxpayers who are paying their fair share.”
At the time of sentencing, Visconti faces a maximum sentence of 13 years of imprisonment and a maximum fine of $750,000.
Ronald Garber pled guilty previously to two counts of subscription to a false tax return and is scheduled to be sentenced by Judge Bernal on January 23, 2017. Another former Axium associate, Christina Futak, 60, of Orange, California, pled guilty to tax evasion and is scheduled to be sentenced on December 19, 2016. Futak, a former tax professional, also stipulated to the entry of a civil order enjoining her from engaging in the business of tax preparation.
“Axium was a prominent payroll services business that had millions of dollars of client funds under its control. But instead of safeguarding that money and meeting their legal obligations to their clients and the IRS, Visconti and Garber put their energy into siphoning money from the company for their own personal use,” stated Acting Special Agent in Charge Anthony J. Orlando of IRS Criminal Investigation. “Taxpayers and businesses can be assured that IRS Criminal Investigation will vigorously pursue anyone who collects taxes and fails to timely remit those taxes.”
The Chapter 11 bankruptcy case for Axium, initially filed in January 2008, remains an active case proceeding in which thousands of documents have been filed.
The investigation into Axium was conducted by IRS Criminal Investigation, and the case is being prosecuted by Assistant United States Attorney Angela J. Davis of the Major Frauds Section.
Millions Diverted from Axium International Before Bankruptcy
USAO – California, Central Updated October 26, 2016
Central District of California DOJ / 16-264 / October 26, 2016