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Hoffman hit on tax beef

CineVisions chief and former Carolco president Peter Hoffman was indicted by a federal grand jury Wednesday on two counts relating to the filing of income tax returns. The felony criminal indictment accuses Hoffman of failing to report as income money he received as loans from Carolco.

Hoffman, who will be arraigned Jan. 6 in U.S. District Court in Los Angeles, was indicted on charges of attempted tax evasion and subscribing to a false return. The counts stem from the filing of his 1989 joint-tax returns.

“Hoffman willfully attempted to evade and defeat a part of the income tax due and owing by him and his spouse” the indictment on the tax evasion count states in part.

The U.S. Attorney’s office and the Internal Revenue Service claim Hoffman owes the government $70,000 in additional taxes based on $325,000 in loans and $101,000 in reimbursement of personal expenses he received from Carolco. Hoffman repaid the loans the following year.

The criminal filing is unusual in several respects, as such enforcement is typically pursued through a civil action. Also, the grand jury only heard from low-level former Carolco employees; former co-chairmen Mario Kassar and Andy Vajna were never called to testify.

It also comes at a time when the IRS is conducting a probe into the finances of Kassar – who now has a first-look deal with Paramount – and Vajna, which began in April. The indictment suggests the government is having difficulty in those probes and may try to pressure Hoffman into becoming a witness against the other two.

The IRS recently closed a six-year audit of Carolco without asserting any civil or criminal liability against the company or its employees relating to payments made to Hoffman.

In June, Vajna settled an IRS claim over Carolco’s tax planning, which is unrelated to the current probe of the pair and the indictment of Hoffman.

“I have never seen the government pursue a case like this,” said Hoffman’s attorney Tom Pollack, of Irell & Manella. “We fully expect to prevail at trial.”

According to a statement released by a spokesman for Hoffman, “All the payments (to Hoffman) were clearly rendered in both Carolco’s and Mr. Hoffman’s books and reflected in U.S. bank accounts, with no effort whatsoever to conceal or evade reporting of these payments.”

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