LOS ANGELES—In a case that stretches back to 2010—and even farther, to 2007, the year Girls Gone Wild founder Joe Francis was indicted no two counts of felony tax evasion—the Ninth Circuit Court of Appeals ruled Tuesday that a Cayman Islands-based company called Rothwell Ltd., which sued in 2010 arguing Francis’ $20 million tab was imposed wrongly on its Morgan Stanley Smith Barney investment account, is in fact controlled by Francis and must pay the back taxes from the account.
According to Law360, “A unanimous three-judge panel affirmed a trial court's ruling that the tax levy imposed on the account by federal officials was valid and that the Cayman Islands-based Rothwell owned the particular account as Francis' nominee.”
The unpublished four-page ruling stated, “This control is best illustrated by the purchase of property in Mexico, completed at Francis' direction with funds from Rothwell.”
The case is reminiscent of Francis’ bankruptcy proceedings, reported on by AVN in May, in which his Chapter 11 trustee, R. Todd Neilson, accused Francis of fraudulently transferring the company’s trademark to an offshore entity he owns, and also of “siphoning money out of GGW and funding the offshore company, Path Media Holdings LLC, through a trust he owns.”
In the Rothwell case, according to Law360, government lawyers also argued that “Francis formed an offshore trust for his own benefit in order to shelter his assets from creditors and that an attorney working for Francis is given ultimate oversight over the offshore trust.”
Specifically, the article added, “Government lawyers argued the account Rothwell opened at Morgan Stanley's Irvine, Calif., office ‘was funded entirely by Joe Francis and his wholly owned companies via a series of offshore transfers, that was used, in part, to purchase a multimillion-dollar Mexican estate used by Francis as a personal residence.’”
The Ninth Circuit panel consisted of U.S. Circuit Judges Milan D. Smith Jr. and Mary H. Murguia and U.S. District Judge Jack Zouhary of the Northern District of Ohio.
