The inflated deductions listed in the indictment involved Mantra Films in Santa Monica and Sands Media in Nevada.
Mantra Films, which produced, marketed and sold the "Girls Gone Wild" videos, is listed in the indictment as a so-called S corporation, an entity that generally pays no taxes. Instead, it funnels profit to shareholders, who then report the income or losses. Sands Media, also an S corporation, performed marketing, media buying and promotions for Mantra, the indictment said.
"There's a level of sophistication here that you don't normally see with a regular tax evasion case," Henning said.
Ultimately, Francis reported $13.9 million in taxable income for 2002 and said he owed $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.
Francis is scheduled to appear before U.S. Magistrate Judge Robert A. McQuaid Jr. in Reno on May 22 on the tax charges.
Today, Francis is scheduled to appear before a federal judge in Florida to face the contempt citation, issued last week after he failed to surrender after a breakdown in settlement talks in a lawsuit brought by seven young women. The plaintiffs alleged that they were victimized by Francis' film crews during filming in Florida in 2003.
Last year, Francis pleaded guilty to violating a law that aims to protects minors by requiring producers of pornography to document the ages of the models they hire. He was sentenced to probation and community service.
Two of Francis' companies, Mantra and MRA Holdings, also resolved Justice Department charges in connection with the record-keeping law, agreeing to pay $1.6 million in fines and restitution.
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richard.verrier@latimes.com
