The Madness of Joe Francis: "I thought we were all just having fun. I was wrong." (20 page)

“Since Southern injustice is never concluded without a friendly judge,” Barnes wrote, “the lawyers file, dismiss, then re-file their civil claim in federal court on behalf of the women and their parents, then affirm a stay, while secretly awaiting a new federal judicial appointment. After that appointment they move to lift the stay. Who was this new judge they waited on? Their long time friend and decade-long former law partner Richard Smoak, with a visceral bias against Francis’ business, likely known to them.”

The language of the lawsuit was so outrageous, so laughable, and the timing so bad it seemed just crazy. Francis had always had his own perspective and selective memory about events in his case, but the lawsuit was filled with outright misrepresentations about the facts, plus incredible accusations and scenarios.

During Francis’ incarceration, his lawyers privately discussed Francis’ deteriorating mental condition. They filed motions asking for his release because confinement was exacerbating his bipolar and attention deficit disorders.

Now, Francis seemed to be losing touch with reality and becoming increasingly self-destructive.

When the lawsuit was filed, Francis recorded a message that was posted on his Web site. He sat in front of an American flag, sporting a new bowl-cut hair style, and said he was fighting for the rights of all Americans.

“This can happen to you,” flashed on the screen before Francis appeared.

“Free speech is what I want to talk to you about today,” Francis said, his hands clasped in front of him. “I learned the hard way that you can’t take your free speech rights for granted. In 2003, I was falsely accused of illegal activity and wrongfully imprisoned by a small town courthouse gang, including Federal Judge Richard Smoak.”

He complained about his 11-month incarceration without bail and declared it another violation of his civil rights.

“They shackled me and threw me in solitary confinement. I realized, if this can happen to me it can happen to anyone. What happened to me in Panama City is not what we expect in America. When a person is jailed without bail for 11 months in a civil lawsuit it violates the U.S. Constitution and our basic freedoms and liberties.

“I will never stop fighting for free speech, free expression and our right to read or view whatever we choose. As for the clique of conspirators in Panama City, Florida, you can run but you can’t hide from justice.”

He encouraged those viewing the tape to click on an accompanying link that would allow them to email the head of the U.S. House of Representatives Judiciary Committee to urge impeachment action be taken against Smoak.

It didn’t have the desired effect because Smoak remained on the bench, and even continued to preside over Francis’ remaining lawsuit in Panama City for another two years.

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Chapter 18

Taxing

O
n April 6, 2009, Francis’ brand new team of lawyers filed a motion to have the federal tax case thrown out because the prosecutors had been listening in on Joe’s phone calls.

While Francis was locked up in the Washoe County Jail in Reno, Nevada, from June 2007 to March 2008, he’d called his lawyers, and anybody else he could talk to. All of the phone calls – all 6,000 – were recorded.

Francis knew the calls were recorded and in an effort to retain some privacy when talking with his lawyers he would say the words “attorney-client privilege” during those conversations. The federal prosecutors got all those recordings and listened to more than a few of them, even the ones in which Francis was talking strategy with his attorneys.

“Here’s the thing, and this is attorney-client privilege,” Francis said in a call to Miami attorney Roy Black on August 3, 2007, “but where you’re going to be able to slaughter that case, you’re going to be able to slaughter their star witness, slaughter. I’ve done a lot of legal research and every single case, murder, whatever it is, always comes down to just slaughtering that person.”

Francis’ attorney, Brad Brian wrote in the motion that Francis was talking to Black about Black taking over the tax case.

Brian said the prosecutors quoted Francis from this conversation, but edited out the part where Francis said the words “attorney-client privilege.” Brian said the prosecutors also misquoted Francis as saying he wanted the trial postponed for two or three years, as long as he didn’t have to wait in jail that whole time.

Brian said neither Francis nor Black says that. Instead, Francis said he wouldn’t mind the trial being postponed until Black could get up to speed.

Brian said the prosecutors couldn’t argue that they hadn’t listened to the conversations because they’d quoted one of them in a motion to the court. He said if the prosecutors had listened to one privileged conversation, who was to say they didn’t listen to all of them, including the ones in which trial strategy was discussed.

Brian argued to California federal Judge S. James Otero that there was no way to remove that stain from the case, that Francis was hopelessly prejudiced by this intentional invasion of privacy.

Assistant U.S. Attorney Caryn Mark wrote in her response that Francis shouldn’t have been talking strategy with his attorneys on a line he knew to be recorded. She said Francis waived his attorney-client privilege by talking on a recorded line. She said he “double waived” this privilege on those times when he placed the call through his office.

Francis would very often call his office and have an assistant find the number he needed and place the three-way call. Mark said that meant that a third person, Francis’ assistant, was listening in to the conversation. Any call that Francis made to his office from the jail, Mark said, was fair game.

But, she said, even though they believed that Francis didn’t have an attorney-client privilege any time he called his lawyer on a recorded line, if he called his lawyers directly, instead of going through his office, the prosecutors would treat that call as private and didn’t listen.

The tax case shaped up like this:

On April 11, 2007, a federal grand jury handed down an indictment against Joe Francis on charges of tax evasion. The Department of Justice sent out a press release saying Francis was accused of deducting $20 million in false business expenses from his companies’ 2002 and 2003 corporate income tax returns.

Mantra Films Inc., which was headquartered in Santa Monica, Calif., didn’t pay income tax. Instead, Mantra’s income or losses were given to its lone shareholder, Joe Francis, who would then report the income on his individual income tax return.

Sands Media Inc., which did Mantra’s marketing and promotional services and was headquartered in Nevada, was another corporation that didn’t pay income tax and passed everything along to its sole shareholder, Joe Francis, who then had to report the income on his tax return.

In July 2001, according to the indictment:

Francis opened an account with Morgan Stanley in the name of Rothwell Limited, utilizing nominee signatories to conceal his beneficial ownership of this brokerage account.

Francis then had Rothwell Limited open a bank account at the Bermuda Commercial Bank Limited in Hamilton, Bermuda, again using “nominee signatories” to hide his ownership of the account.

Francis then allegedly overstated millions of dollars in deductions on his 2002 and 2003 tax forms.

He was facing 10 years in prison and a $500,000 fine, plus the delinquent taxes.

His defense was simple: he blamed his former accountant, Michael Barrett, the guy who prepared all the tax forms. Francis said Barrett took advantage of a federal whistleblower program in which the whistleblower could get up to 30 percent of the tax money. It was called an IRS informant bounty and in this case, that would bring the accountant about $6-10 million.

Francis sued Barrett, saying among other things he failed in his duties to protect his client.

Aaron Dyer said shortly after the indictment came down that the tax case shouldn’t be a problem. According to federal law, the prosecutors would have to show that Francis knew about the fraudulent activity and did it on purpose. Dyer said the feds were also claiming that the Punta Mita property wasn’t a business expense, but a private residence.

“That’s the Girls Gone Wild mansion,” he said. They do a lot of filming there.

The tax case, which lasted from 2007 to 2009, was where Francis’ paranoia really became a problem. He went through five sets of lawyers. His divorce from the last firm, Bob Bernhoft and Bob Barnes, was nasty and very public.

Barnes and Bernhoft, known simply as “The Bobs,” were trying to move their Minnesota practice into the Los Angeles market. Francis made it clear that he wouldn’t be recommending them.

“As for a practice in LA,” Francis wrote in an email to the Bobs, “it is highly unlikely if you piss me off. I KNOW EVERYONE AND THEY WILL DO WHAT I SAY!”

Francis told the press on January 22, 2009, that he planned to sue the Bobs because the Bobs wouldn’t “perform certain acts.”

It was a pattern. He’d hired several lawyers over the last year for the sole purpose of filing a single motion attacking Smoak and seeking his recusal from the case. Barnes had filed one and argued it in court. Smoak denied it, as he did two others.

Francis fired his entire corporate legal staff in 2008, including longtime counsel Michael Burke.

The revolving door of lawyers began in jail when Francis couldn’t make bond. He went through a string of lawyers then, who would file a motion for bond as soon as they were hired. As often as not, they were gone the day the motions were denied.

Joe Francis’ rage was caught on tape on August 28, 2009, as he was walking through a West Hollywoood nightclub called Guys & Dolls.

He was inching through the crowd near the bar when Jayde Nicole, a Playboy playmate, reached a long arm past two other men and poured a drink down Francis’ neck. He jerked away, then turned toward the bar, trying to figure out what happened. Then instantly, he snapped. He pushed through the two men between him and Nicole, reached out and jerked her off a barstool by her long black hair. He threw her to the ground, but before anything else could happen several men charged him, surging through the crowd.

Francis ran, pushing hands off him as he bulled through those ahead of him who had no idea of what was going on, while a tide of men followed in his wake, many of whom stepped on Nicole as she was struggling to get off the bar floor.

She got back to her stool and sobbed uncontrollably while her friends held her.

Joe Francis claimed he acted in self-defense, saying the 115-pound girl had threatened to kill him and he yanked her from the bar stool as she was reaching for a bottle to hit him with.

Nicole filed suit, and said she was standing up to Francis for all the women he’d abused through the years who didn’t have the resources to fight back.

Francis countersued.

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Chapter 19

Contemptuous

J
oe Francis was full of contempt. It was something the lawyers in the Plaintiff B lawsuit were counting on.

On Wednesday, April 22, 2009, 10:27 a.m. in Los Angeles, Ross McCloy and Rachel Pontikes were questioning Joe Francis with his attorney Rick Bateman present while Larry Selander and Tom Dent listened in by phone. For the most part, McCloy was asking the questions:

“Do you sell the DVDs?” McCloy asked.

“I don’t understand the question as to ‘you,’” Francis answered.

“Does Mantra Films Inc. sell these DVDs? What does Mantra Films do with these DVDs?”

“We sell the DVDs.”

“And do you sell them internationally as well as nationally?”

“Sir, once again, as to ‘you,’ I don’t understand the question. What do you mean by ‘you’?”

“Does Mantra Films Inc. sell these nationally and internationally?”

“I’m not going to answer …”

Bateman interrupted, “Excuse me.”

“Wait just a minute. I …” McCloy said.

“Excuse me. Let me … Mr. Francis’ concern is simply that when you’re asking if you sell the films, he is here as Joe Francis. Mantra sells the films. Could you clarify that for us? And I think it’s a valid concern,” Bateman persisted.

“Well, let me ask you just some basic questions then,” McCloy said.

“I’m not Mantra Films,” Francis said. “So if you’re going to ask me a question you’re going to have to specifically state a plaintiff.”

“What is your relationship to MRA, LLC?”

“I don’t have one. I don’t know.”

“Is there an entity known as that anymore?”

“I don’t know. I’m not aware.”

“You’re not president or an officer or director or member of MRA LLC?”

“I don’t know.”

“You do know that’s the defendant in this case don’t you? Have you ever had any relationship or ownership interest in Aero Falcons LLC?”

“I don’t quite understand the structure.”

“There’s not a structure. It’s just, I’m asking you a question as to whether you have any ownership interest.”

Bateman interrupted, “He has answered the question.”

“Is that an objection?” McCloy asked.