"Girls Gone Wild" Tax Indictment Teaches Us Not To Deduct Funny-Looking Numbers

Joe Francis, the quivering chumbucket behind the “Girls Gone Wild” franchise, got indicted Wednesday for tax evasion, as noted by commenter LAGirl. His story holds a lesson for all taxpayers: when claiming deductions, don’t use funny-looking numbers.

Numbers that set off a red flag for the IRS: round numbers, dollar amounts without decimals… and deductions consisting of the same number repeated over and over again.

Like Francis’ false insurance claim for $333,333.33.

He also claimed $500,000.00, and $1,666,666,67 deductions. Ask any accountant. Those are damn stupid numbers.

Look at a receipt in your wallet. Did that coffee cost $1.11? Or $1.00? It was probably more like $1.28.

The same goes for your deductions. Let’s face it, most of us don’t keep every receipt, but when you’re slightly fudging a number from memory, at least make it look right. — BEN POPKEN

Federal Tax Rap for “Girls Gone Wild” Boss [The Smoking Gun]

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  1. tvh2k says:

    Wouldn’t be the first time Francis used funny numbers. He sued Texas college student “Amy Doe” for $25,000,036 in Apr 2004. $25mil for defamation, $36 for breakfast the morning after they had sex :-P

  2. Scout says:

    Maybe he has some of those girls on the videos do his taxes for him?

  3. moorie679 says:

    People at H&R Block would have told him not to use rounded numbers but i guess the prick wanted to save a couple bucks…..

  4. zentec says:

    This guy is one of the slimiest scumbuckets on the face of the planet. One day, he’s going to be met by the father of one of those girls he videotapes and it’ll be a case of Dads Gone Crazy.

    Tax fraud is just another one of his good points.

  5. bambino says:

    I’m guessing the 333,333.33 is him thinking he can deduct 1/3 of 1,000,000. But yes, still stupid.

  6. Nemesis_Enforcer says:

    @zentec: Maybe I am a little jaded but those girls weren’t forced to do anything. So someone using the footage they consented to have made of them to make a buttload of money really isn’t slime in my opinion. The girls want to get the attention. So really thier dad should be mad at them not the producer. I am sure they flash and do crazy stuff even without the cameras he just happens to be there to catch it.

  7. govkid201 says:

    Girls Gone Wild is supposed to come to Virginia Tech. but i hope this fiasco will prevent them from coming. it would be the best thing…

  8. VeritasMan says:

    The IRS Gone Wild is not a pretty sight.

  9. pestie says:

    The guy may well be a slimebucket, but it’s really not like he’s forcing any of these girls to do anything. Yeah, they’re drunk, but really, what’s the harm in showing your drunken boobs during spring break or Mardi Gras? They may be embarrassed when they sober up, but they’ll get over it.

    As for this guy’s tax problems, well, I’ll never understand why people who make ungodly amounts of money decide to cheat on their taxes. The risks just aren’t worth it. Just deduct what you can, pay what you owe, and enjoy your profits. Jesus.

  10. Hoss says:

    @Nemesis_Enforcer: Come on — getting 18 year olds drunk then screwing them on film is ok by you?

  11. spanky says:

    @Nemesis_Enforcer:

    One of the more serious accusations against this guy is that he does force girls to do things.

  12. armacy says:

    …and 16 and 17-year olds.

    and of course

    “Eventually, Szyszka says, Francis told the cameraman to leave and pushed her back on the bed, undid his jeans and climbed on top of her. “I told him it hurt, and he kept doing it. And I keep telling him it hurts. I said, ‘No’ twice in the beginning, and during I started saying, ‘Oh, my god, it hurts.’ I kept telling him it hurt, but he kept going, and he said he was sorry but kissed me so I wouldn’t keep talking.””

    http://www.latimes.com/features/magazine/west/la-tm-gonewi

  13. number9ine says:

    Dunno about the decimal thing… my CPA rounds off cents on a dollar. I asked him about it, and he said it’s not an audit flag, and is in fact standard practice. He did say round or repeating numbers (especially large amounts like this tool reported) are serious audit flags that automatically pop up when your return is processed by the tax man.

  14. MyThighsRHot4GoatFelons says:

    One can only hope that when this piece of crap is actually serving time, “No”, and “Oh my God, it hurts” will be words he himself will be using. Karma being what it is and all that…

  15. PBH says:

    Do you think he gets to write off all the grain alcohol and date rape drugs too? Because I feel like I’m missing out on some serious deductions by not being involved in these kind of productions.

  16. @Nemesis_Enforcer: “Maybe I am a little jaded but those girls weren’t forced to do anything.”

    Several pending lawsuits say otherwise — he allegedly gets underaged girls drunk (as well as girls over 21), has allegedly spiked drinks with date rape drugs, and has allegedly raped more than a few, who are locked in to the room while his security guard stands outside to prevent escape. They get a T-shirt as a gift for being raped.

    Obviously the vast MAJORITY of those girls are just flashing their boobs around, but he’s not just some innocent taking advantage of their willingness to flash. He has “sexual predator” written all over him, and I’d frankly be shocked if he’s not in prison for sex with a minor or rape before the end of this decade.

  17. tentimesodds says:

    @govkid201: Yeah, I agree that it would be for the best if GGG didn’t make a video of VT girls. Best for the eyes of the country. Wahoowah.

  18. nmc says:

    In statistics this is referred to as Benford’s Law. Each subsequent number, starting with 1, decreases in percentage of times used. This is an ingredient into the IRS’s decision to audit some people.

    Also, the cents don’t make a difference, if you round up and down all the particular cents it comes out to virtually the same tax liability.

  19. I read Claire Hoffman’s original Los Angeles Times article about Francis this summer, but, returning to it now, I’m struck by both his insane, out-of-control creepiness and Hoffman’s unbelievable writing style. I don’t mean “unbelievable” in the sense that it’s not believable; I mean that she’s a hell of a writer, and this is a hell of a piece. I’m linking to it again so that you make sure to read it.

    There’s got to be some connection between this, Don Imus’s “nappy-headed hos,” and various other misogynistic events of the recent past, don’t you think?

    If you’re like me and want your television shows to be ripped from the headlines, go ahead and download “Release”, Law & Order‘s episode based on the Girls Gone Wild series.

  20. MonkeyMonk says:

    Every accountant I’ve ever used has suggested doing my taxes using the IRS-allowed “whole number method” where you essentially round each total (not individual reciept numbers) up or down so there are no decimals.

    Since the IRS allows this how does this set off a red flag?

  21. gbroiles says:

    I am a tax attorney and enrolled agent (e.g., passed a test allowing me to represent taxpayers in proceedings before the IRS). I represent people in audits.

    I disagree strongly with the suggestion that the big problem with the tax returns in Joe Francis’ case were his use of what I’d call statistically improbable numbers. He makes enough money that (a) his tax returns are likely to get at least a cursory glance by a real human being, and (b) the rules for his returns aren’t going to apply to the vast majority of people who are filing 1040’s.

    The biggest cause of audit or contact with IRS after a return is filed are simple errors – math errors, or amounts that weren’t even included on the return because the form was lost, forgotten, or misunderstood.

    After ignoring that low-hanging fruit, most audits are generated by comparison to statistical norms – the exact figures aren’t shared outside of IRS (duh), but it is relatively well-known that IRS compares numbers on your return to numbers on other peoples’ returns to see if they’re similar. For example, if the average charitable deduction is $2K for a 1040 with gross income of $100K, then someone who’s reporting charitable contributions of $30K ought to be prepared for closer scrutiny of their deductions. There’s also a common sense aspect to this – someone who reports mortgage interest of $80K against income of $100K may not be disclosing all of their income. (On the other hand, maybe they’re living off of savings, investments, or an inheritance – but these other items will also be visible to IRS.)

    IRS gets to look at something like 100 million tax returns every year – so they’ve got a pretty good idea where the statistical norms are, and what’s unusual and what’s not unusual.

    Some tax prep programs – professional and do-it-yourself like TurboTax – will generate statistical reports like this, though the ones I’ve seen have all been run against national numbers, not regional numbers. I am in the SF Bay area, where income and expense numbers are out of scale with middle America, and I believe that IRS uses regional norms, otherwise they’d be bothering everyone around here about their outlandish property tax and mortgage interest deductions.

    Another strong predictor of audits are the type of return(s) you’re filing, and the area where you live – different areas of the country have vastly different audit rates, and audits are much more likely for small business people filing a Schedule C versus a wage-earner filing a bare 1040 or a 1040EZ. A return with EIC is also more likely to be audited because the fraud rates for EIC returns are much higher.

    In Joe Francis’ case, it’s perfectly reasonable that his insurance expense was a statistically improbable number, simply because he was able – perhaps legitimately – to determine that number himself, since he owned/controlled the insurance company he made the payment to. This is a well-known tax planning technique used by corporate taxpayers – it’s called a “captive insurance company”, and can be done both to reduce tax and also to provide asset protection to the owner(s).

    The technique involves creating an insurance company in a low-tax or no-tax jurisdiction; the captive insurance company then sells insurance to the person or entity in the high-tax jurisdiction. (For this to work, the insurance must be related to a trade or business, and hence deductible.) The entity in the high-tax jurisdiction gets a deduction in the amount of the insurance premium – the entity in the low-tax jurisdiction gets income in the same amount, but this is considered favorable because the income is recognized in a low-tax or no-tax jurisdiction. Also, the funds have been shifted from one entity to another – so if the first entity is sued, the second entity’s funds can be used to defend the first entity, but will not necessarily be (fully) available in the event that the lawsuit is lost.

  22. stanfrombrooklyn says:

    How is Girls Gone Wild still in business? It seems to me the novelty of co-eds flashing their boobies at spring break would have worn off by now.