IRS can freeze ‘Girls Gone Wild’ money

Joe Francis, founder of the soft-porn Girls Gone Wild video empire, has lost a round in his effort to regain control of $22 million the IRS seized.

Last month, Francis filed suit in federal court in Los Angeles against the federal tax collector contending that the agency improperly issued a jeopardy assessment against him. The action effectively freezes Francis out of access to the millions held in two brokerage accounts linked to the video entrepreneur.

Jeopardy assessments, which essentially amount to immediate seizures, are typically used when the IRS believes such action is the only way to preserve assets to cover tax obligations. The IRS contends that Francis owes $23 million in taxes, penalties and interest for 2001, 2002 and 2003.

Francis, however, says the IRS took his money because the feds are irked that he was able to plea bargain his way out of additional jail time in connection with the false return filing case against him.

Not so, said the IRS in response to Francis' challenge. The agency said that even after Francis' guilty plea and subsequent attachment of his brokerage accounts, he tried to move most of the assets offshore.

One of the alleged Francis accounts was with Morgan Stanley and bore the name of a Cayman Islands corporation with a Turks & Caicos Islands address. The other was with UBS, prime IRS target in its recent investigation of suspected tax evaders.

Not smart, Joe. Haven't you been paying attention to all the to-do about suspect offshore accounts in general and UBS holdings in particular?

U.S. District Judge R. Gary Klausner found the government's argument compelling. Klausner said Francis' dealings with the account managers suggested he "was planning to
place his property beyond the reach of the Government," providing
after-the-fact support for the freeze.

So the judge ruled that the IRS can keep Francis' $22 million, at least for now.

That means he's going to have to come up with money elsewhere to pay his bicoastal court costs.

Francis is dealing not only with the California battle over whether he really owes past taxes, but he's also facing legal bills stemming from a Florida courtroom battle with four women in connection with their appearances in Girls Gone Wild videos.

Related posts:

• Girls Gone Wild founder sues IRS
  
• Tax plea for Girls Gone Wild founder
• Girls Gone Wild lawyer claims 'IRS Gone Wild'
• Joe Francis' 'Wild' deduction defense
• Girls Gone Wild founder facing tax fraud charges

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