Implosion of payroll services company jars biz

In a town where everyone’s an aspiring something, the sudden shuttering of Axium Intl. sends a healthy reminder to Hollywood: You never really know who you’re dealing with.

Court documents filed by Axium’s primary lender, GoldenTree Asset Management, paint a damaging picture of the top two partners in the entertainment industry’s third-largest payroll services company — men with close ties to the biz and sights set on becoming film producers.

Company CEO John Visconti, chief operating officer Ron Garber and their respective ex-wives are accused of using Axium as “their own personal piggy bank to finance their extravagant lifestyles.” GoldenTree claims they diverted “untold millions of dollars in cash and other assets to secret bank accounts.”

Actions helped lead to the Chapter 7 bankruptcy filing on Jan. 8 that resulted in the firing of Axium’s 550 staffers worldwide and the seizure of millions of dollars in payroll checks and other assets that production personnel on films and TV shows may ultimately never recoup.

The company and its assets, including software, hardware and licenses, will be sold off today at an auction at the U.S. Bankruptcy Court for the Central District of California in Los Angeles, with proceeds to help recoup money for creditors.

Bidding will start at $2.5 million, with Ruben Rodriguez, former prexy of Axium, submitting the starting bid to acquire the company’s entertainment business.

GoldenTree’s lawsuit, also filed in the U.S. Central District Court, especially puts the spotlight on 65-year-old Visconti, who allegedly also goes by the aliases of Bijan Manoochehri and John Manocheri and possessed multiple social security numbers for unknown reasons.

Together with Garber, a former lawyer, Visconti is portrayed as a man looking to live the lavish Hollywood lifestyle — with the bill footed mainly by Axium.

They’re said to have leased a fleet of luxury cars at a total cost of nearly $462,000 a year, taken advantage of non-business-related flights on private jets costing the company up to $1 million, and hired Sports Illustrated swimsuit model and softcore porn actress Amber Smith as a company “consultant.”

Among other claims: That beginning in 2005, Visconti and Garber had an armored car deliver $8,000 in cash each week– money that was not part of their $400,000 salaries; that multiple transfers of a Beverly Hills estate were made between Visconti and his investment arm as a “bonafide gift”; and that Visconti spent $40,000 at Tiffany’s using his corporate American Express card for Valentine’s Day presents, a bill that was never paid.

Lavish spending sprees by company toppers, especially in Hollywood, are never surprising.

In fact, many individuals who dealt with Visconti never questioned his ways with his wallet. They assumed he came from considerable wealth and considered him trustworthy, charming, polished and a well-mannered family man who loved movies and wanted to become a prolific producer.

In fact, the Iranian’s adoption of the last name Visconti is said to refer to the famed Italian director Luchino Visconti, who died in 1976; John Visconti started using the name in 1977, individuals who dealt with him say.

Since the mid- to late 1990s, Visconti had been affiliated with Visconti Cosmetics, Lipstick Model Management, Desire Films, Nite Zone Inc. and Cybertech. Axium was formed in 2001.

Visconti’s charm helped land Axium such high-profile clients as 20th Century Fox Television, IATSE, the Writers Guild of America, as well as a slew of impendent film productions. The company had offices in Los Angeles, Burbank, Hollywood, New York, Las Vegas, Toronto, Vancouver and London.

In addition to handling payroll, Axium also provided gap financing for film productions.

But staffers hardly found Axium’s situation charming when it abruptly closed its doors this month.

In its filing, GoldenTree attributes the shuttering to a mishandling of the company’s funds far beyond what Visconti and Garber spent to keep up their lifestyles.

Through their Unity America Fund and JVE Enterprises, Visconti and Garber are said to have perpetrated a multiyear scheme to create fictitious profit by filing false returns that understated Axium’s employment tax liabilities by tens and perhaps hundreds of millions of dollars, and diverted millions of dollars in cash and other assets from Axium to secret bank accounts for their own personal uses.

After the IRS began investigating Axium’s finances, Visconti and Garber paid the IRS $31 million in previously undisclosed past-due tax liabilities, interest and penalties, owed in 2004, in the hopes of preventing the IRS from asserting personal liability against them. It estimated it would also need to pay another $70 million-$100 million in missed tax payments for four additional years.

When it found out what was going on, GoldenTree wanted its money back. Company, and other lenders, had invested $130 million in the payroll company between 2004 and 2007.

On Jan. 4, GoldenTree seized $22 million from Axium’s bank accounts, leaving the company unable to honor any of its payroll obligations or even operate itself, said Axium’s court-appointed trustee, attorney Howard Ehrenberg of the law firm SulmeyerKupetz.

Four days later, Axium closed its doors, laid off its staffers and sought out bankruptcy protection for each of the 40 entities Axium operates.

Clients outside the entertainment industry included Northwest Airlines and UnitedHealth.

One New York staffer believed the company had $15 million in outstanding checks that its recipients will not be able to cash due to the bankruptcy.

The Hollywood guilds have tried to assuage members’ fears.

“AFTRA staff is contacting signatory employers that have used Axium’s payroll services to assure payments to members. AFTRA is also making claims with employers for residual and other checks paid through Axium that are no longer valid,” org said in a statement.

The Screen Actors Guild said: “At this time it is impossible to determine whether significant sums can be recovered through the bankruptcy process, but you can rest assured that SAG will take every step possible to recover all sums due to SAG-represented performers.”

Companies affected have moved their payroll services to Entertainment Partners, Cast & Crew and Media Services.

A correction was made to this article at 2:13 p.m. PST

Follow @Variety on Twitter for breaking news, reviews and more