The Axium saga continues, now appearing that Defamer’s headline, “Axuim: The Enron of the Payroll Services World,” was less of an overstatement than it initially appeared. (Props to Defamer for continuing to cover a story that has resulted in hardship for thousands of entertainment industry employees and which has been relatively underplayed by the trades.)

Axium’s financier, Golden Tree Asset Management, has filed a multi-million dollar lawsuit in California court against Axium principals John Visconti and Ronald Garber; their subsidiary companies, and their wives and ex-wives. I will try to have the full PDF of the lawsuit posted for your download soon (until then, Defamer has it on their page along with pictures of SI swimsuit model and “soft core porn actress” Amber Smith. Read below and you’ll know why).

In the meantime, here are the suit’s “background facts.”

This is a case involving, among other things, massive fraud, theft, self-dealing and the looting of assets of the now-bankrupt Axium International, Inc., one of the entertainment industry’s leading payroll services firms, and all of the subsidiaries of Axium Holdings, Inc. (collectively, “Axium”). Defendants John Visconti and Garber, in connection with and through their investment vehicles, UAF and JVE, and their respective wives or ex-wives, Defendants Maya Visconti and Susan Cruz, and their servant, agent or employee, Christy Futak, perpetrated a multi-year 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 by diverting untold millions of dollars in cash and other assets from Axium to secret bank accounts and otherwise to their own personal uses. Defendants further used Axium’s concocted and false financial condition to induce Golden Tree and certain other lenders to extend $130 million in financing between 2004 and 2007, which loans were secured by substantially all of Axium’s assets. Then, in violation of numerous loan covenants, Defendants diverted those assets out of Axium, using Axium as their own personal piggy bank to finance their extravagant lifestyles. While Defendants John Visconti and Garber in particular gorged themselves on the fruits of deception and fraud, Axium, its clients and roughly 550 employees suffered, ultimately, with the loss of their jobs. When the IRS recently began to unearth Defendant’s fraudulent scheme, Defendants John Visconti and Garber directed Axium to pay to the IRS tens of millions of dollars in previously undisclosed past-due tax liabilities and unnecessary interest and penalties, in the hopes of preventing the IRS from asserting personal liability against them. Defendants’ pattern of fraud, theft and gross mismanagement and waste resulted in each of 40 Axium entities seeking bankruptcy protection on January 8, 2008, by the filing of Chapter 7 petitions in the United States Bankruptcy Court for the Central District of California.

The filing totals 36 pages. Here are some of its other allegations:

1. John Visconti has gone by multiple names (Bijan Manoocherhri and John Manocheri) and has been issued two social security numbers and is linked to two other social security numbers.

2. Visconti’s ex-wife was given the use of company-financed Bentley that was later given to her in divorce proceedings.

3. Axium Amex cards were used to charge “large personal expenses,” including $40,000 at Tiffany’s for Valentine’s Day purposes, and not repaid.

4. Axium funds were used to pay hundreds of thousands of dollars in both Garber and Visconti’s divorce proceedings.

5. “Model and actress” Amber Smith lived in a corporate apartment financed by Axium, and she was the recipient of “numerous large payments” as a “consultant” to the company.

6. Axium’s payment to the IRS of $31 million in delinquent tax charges in September, 2007 created a “significant tax drain” on the company, threatening the preservation of its business and its repayment responsibilities to Golden Tree.

7. Following this payment it was estimated that there was an additional $70 million to $100 million tax liability, which the lawsuit speculates arose from a scheme by the defendants to intentionally alter payroll dates to cover up the late deposit of payroll taxes.

8. Golden Tree put Axium and a sister company, Axium ECG, up for sale in November 2007. But in December Axium ECG reforecast its EFITDA from $9 million to $4 million, thus shaving almost $100 millon off its value. This reduction in value was key to Axium’s inability to generate additional capital.

9. According to the history in the lawsuit, Golden Tree still participated in efforts to borrow additional funds to keep Axium alive but these plans fell apart when Viscoti and Garber demanded a “waiver and release from all personal liability… In other words, Defendants John Visconti and Garber ‘tanked’ Axium because they could not extract personal protection against claims by Axium’s lenders.”