RIVERSIDE, California – The former CEO of Axium International, Inc., a leading Hollywood payroll services company until it collapsed in 2008, has been sentenced to two years in federal prison for defrauding the Internal Revenue Service by failing to report as income millions of dollars he skimmed from company coffers.

          John Visconti, 74, of Beverly Hills, was sentenced on Monday by United States District Judge Jesus G. Bernal, who also ordered the defendant to pay $1.75 million in restitution to the Internal Revenue Service.

          Visconti was convicted by a federal jury in October of tax evasion, conspiracy to defraud the IRS, and filing a false tax return.

          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 per 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.

          As the result of gross mismanagement, Axium collapsed in 2008 after revelations that its tax delinquencies exceeded $100 million. These tax delinquencies resulted in the IRS assessing a $15 million recovery penalty against Visconti.

          According to the evidence presented at trial last fall, Visconti and Axium’s former chief operating officer – Ronald Garber, 62, of Santa Monica – used a variety of elaborate mechanisms to divert approximately $5.1 million from Axium. Additionally, Visconti took $1.9 million in corporate loans that he did not repay.

          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 they were not disclosed to the Axium accounting department. Garber and Visconti also diverted approximately $570,000 from Axium by paying invoices submitted by a sham construction company that they controlled. The two men 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 M. 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,” stated Acting Special Agent in Charge Anthony J. Orlando 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.”

          When he imposed the two-year sentence on Monday, Judge Bernal said he was balancing the seriousness of the crimes against Visconti’s recent diagnosis with a serious medical condition.

          Ronald Garber previously pleaded guilty to two counts of subscribing to a false tax return and is scheduled to be sentenced later this year. Another former Axium associate – Christina Futak, 60, of Orange – pleaded guilty to tax evasion and was sentenced to three years of probation. Futak, a former tax professional, also stipulated to the entry of a civil order enjoining her from engaging in the business of tax preparation.

          The Chapter 11 bankruptcy case for Axium, initially filed in January 2008, remains an active case proceeding in which thousands of documents have been filed.

          The investigation into Axium was conducted by IRS Criminal Investigation. The case is being prosecuted by Assistant United States Attorney Angela J. Davis of the Major Frauds Section.