John Visconti, the 74-year-old former CEO of Axium International, has been sentenced to two years in federal prison for defrauding the IRS by failing to report millions of dollars he embezzled from the company. U.S. District Court Judge Jesus Bernal also ordered him to pay $1.75 million in restitution to the IRS.
In its heyday, Axium was one of the largest payroll services companies serving the entertainment industry, and its client list included studios, Fortune 500 companies and broadcasters. At its height, Axium’s gross revenues were well over $1 billion a 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 some cases, those tax returns generated substantial refunds, which were supposed to be held in trust by Axium, which collapsed in 2008 after revelations its tax delinquencies exceeded $100 million.
Axium Ex-Boss Convicted Of Tax Evasion; Company Was Showbiz Payroll Powerhouse Before Collapsing
According to the evidence presented at trial last fall, Visconti and Ronald Garber, Axium’s former chief operating officer, used a variety of elaborate schemes to divert more than $5 million from the company’s coffers. Visconti also took corporate loans totaling $1.9 million that he never repaid. He was convicted in October following a one-week trial in U.S. District Court in Riverside, CA.
As part of the scheme, Visconti diverted tax refund checks payable to Axium and its subsidiaries into secret bank accounts the he and Garber controlled. These diverted funds were not shown on corporate books and records, and were not disclosed to the Axium accounting department. Garber and Visconti also diverted about $570,000 from Axium by paying invoices submitted by a sham construction company they controlled. They also conspired to have thousands of dollars in cash from Axium delivered to them on a weekly basis.
“While they were entrusted with overseeing the business activities of a company that was taking in hundreds of millions of dollars every year, these defendants were stealing millions from Axium,” said United States Attorney Eileen Decker. “In addition to harming their employer and its clients, the defendants defrauded the government by failing to pay taxes on their ill-gotten gains.”
Visconti and Garber caused millions of dollars to be diverted from Axium, and Visconti reported none of the funds pocketed by him on his federal income tax returns.
“Using sham entities and secret bank accounts, Mr. Visconti drained Axium of millions of dollars in cash and assets to finance his lavish lifestyle,” said Anthony Orlando, acting special agent in charge of IRS Criminal Investigation. “Taxpayers and businesses can be assured that IRS Criminal Investigation will continue to vigorously pursue any payroll business that collects taxes and fails to pay them over to the IRS.”
Visconti faced a maximum of 13 years in prison for his crime, but in handing down the relatively light sentence, Bernal said he was balancing the seriousness of the crimes against Visconti’s recent diagnosis with a serious medical condition.
Garber, meanwhile, previously pleaded guilty to two counts of subscribing to a false tax return and is scheduled to be sentenced this year. Another former Axium associate, Christina Futak, pleaded guilty to tax evasion and was sentenced to three years probation.
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