Thursday, September 24, 2009

DOJ Tax Goes Wild for Girls Gone Wild Promoter

On the eve of trial for tax evasion, Girls Gone Wild promoter, Joseph Francis, has pled guilty to two crimes. First, he pled to two counts of the lesser, much lesser tax misdemeanor (i.e., one year or less) offense of § 7207 (willful submission of a materially false return or statement). Second, he pled to a bribery offense under 18 U.S.C. § 201(c)(1)(A). The tax offenses have a maximum 2 year sentence (i..e., 1 year for each count), and the bribery offense has a maximum 2 year sentence. Hence, his maximum incarceration exposure is 4 years.

As not unusual, the parties try to steer the court to their desired result by agreeing that “the appropriate disposition of this is that the Court impose a sentence of” (i) incarceration of 301 days, being the 301 days Frances had already served, (ii) a one-year period of supervised release, and (iii) restitution of $249,705. Interestingly, perhaps in a further attempt to keep the Court on the reservation, the parties request immediate sentencing without a presentencing investigation report by the probation office. I guess the parties hope that the Judge just does not go wild.

By attachment to the plea agreement (Exhibit C), the parties stipulate a significant criminal history which hardly seems the type that would endear Mr. Francis to a sentencing court. I include the content of Exhibit C below. I would not hazard a guess as to what a court will do in Mr. Francis’ case, but I extrapolate / speculate from my own anecdotal experience (a highly selective and wholly inadequate sample) that most judges would be suspicious of the parties’ proffered 301 day sentence (not for the tax offenses alone, but for the bribery offense when considered with the tax offenses and the criminal history). We’ll see.

From a tax perspective, the interesting feature of the plea is the downgrading of the offense of conviction from the charged felony tax evasion to the § 7207 misdemeanor offenses. Most practitioners have argued for, pleaded, cajoled, etc. (but not bribed) tax prosecutors for such a downgrade without any success. (For DOJ’s policies on this, see here.) I imagine that DOJ Tax would have declined to do that here except for the bribery plea. My gut tells me that, in terms of sentencing, the sentencing judge is likely to focus more on the bribery plea and perhaps the criminal history; the maximum 4 year incarceration for the combined pleas will give the judge ample room to do justice.

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EXHIBIT C
The defendant's Criminal History is as follows:

(1 ) On September 26, 2006, the defendant pled guilty in the Central District of California to two counts of 18 U.S.C. § 2257(f)(1) (Failure to Make and Maintain Required Records; Aiding and Abetting and Causing an Act to Be Done);

(2) On April 23, 2007, the defendant pled guilty in the Northern District of Florida to one count of Criminal Contempt pursuant to 18 U.S.C. § 401; and

(3) On March 12, 2008, the defendant pled no contest in Panama City, Florida, to one felony count of Child Abuse, in violation of Fl. Stat. Ann. § 827.03(1)(c), two misdemeanor counts of Prostitution in violation of Fl. Stat. Ann. § 796.07(2)(f), and two misdemeanor counts of Violating a Posted Jail Rule.

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