Tax-troubled celebrities, politicians, outlaws

[AFTP]

http://www.cnn.com/2008/LIVING/wayoflif ... index.html

We hope your initial reaction to this story wasn't "Wait, when is tax day again?" If you haven't filed yet, you'd better hurry. You don't want to find yourself on this list next year.


When singer Willie Nelson got behind on his taxes, the IRS sold nearly everything he owned.

1. Spiro Agnew

It should come as no surprise that the right-hand man of "Tricky Dick" Nixon may not have been quite on the straight and narrow. In 1973, just after Nixon and Agnew were elected to their second term as president and vice president, Agnew became the subject of an investigation that alleged the vice president was not only a tax evader, but a money launderer to boot.

As a result of these allegations, Agnew resigned, was sentenced to three years' probation, and fined $10,000. Less than 10 years later, he was in court again. In 1981 he was ordered by a Maryland court to repay the nearly $300,000 he accepted in bribes while in office.

2. Boris Becker

German tennis star Boris Becker was convicted of tax evasion in 2002. Officials say in the early '90s, Becker was trying to avoid paying notoriously high German taxes by living in Monaco, a tax haven. What he forgot to mention was that he also owned an apartment in Munich, which officials claim was his real place of residence.

After a ten-year investigation, Becker admitted to the court that he knew little about German tax laws and may have done something wrong, but that the apartment was only a place to sleep between tournaments. The court was skeptical and forced him to repay the over 3 million euros he owed the government; he was also given a suspended jail sentence. Becker has since sold the Munich apartment and officially moved to Switzerland, another tax haven.

3. Willie Nelson

Willie Nelson is the poster boy for tax evasion. In 1990, the IRS sent him a bill for $16.7 million dollars in back taxes. Faced with this rather large debt, Willie decided to try and pay the IRS back by releasing a double album entitled The IRS Tapes: Who'll Buy My Memories? The IRS, ever helpful, sped up the process by selling nearly everything he owned.

Lucky for Willie, his friends purchased most of the items and returned them to Willie either free of charge or for a nominal fee. He managed to pay back the IRS in only three years.

4. Darryl Strawberry

He was the baseball's number one draft pick in 1980 and the Rookie of the Year in 1983, but talent, fame and fortune couldn't keep Darryl Strawberry out of trouble with the law.

In addition to allegedly breaking the nose of his first wife, Strawberry was accused of hitting his pregnant girlfriend, violating his probation, soliciting sex from an undercover police officer, possession of cocaine, and a hit-and-run while on painkillers. If that wasn't enough to keep him busy, in the late 80s, he failed to pay taxes on income he made from autograph and memorabilia shows (The exact same thing Pete Rose would go to prison for in 1990).

Strawberry was convicted of the tax charges in 1995 and ordered to pay back more than $450,000 in back taxes. Allegedly, he didn't. The government sued again, and in February of this year, Strawberry was ordered to pay the more than $430,000 he still owes for not having given the government the money they were due.

5. Richard Hatch

The first winner of the American version of Survivor was well known for his lack of clothing on the show, as well as for his lack of paying his taxes. Hatch was convicted in 2006 of failing to report his over $1 million in winnings as a result of the show. In court, Hatch's lawyer said his client was "the world's worst bookkeeper" and that Hatch just forgot to report it. The judge didn't buy it and now Hatch is serving time in prison for his forgetfulness. He is expected to be released in October of 2009. Hopefully Hatch has learned this very valuable lesson. It's hard to hide a million dollars from the government, especially when an estimated 51 million people watched you win it.

6. Leona Helmsley

In 1989, the late "Queen of Mean" was convicted of tax evasion relating to renovations she and her husband were making on their $11 million estate. During testimony, Helmsley's maid quoted her as saying "We don't pay taxes. Only the little people pay taxes," an allegation she would later deny.

She would spend 18 months in prison for cheating the government out of more than a million dollars. Helmsley passed away in August of 2007. At the time of her death, her estate was worth over $4 billion -- $12 million of which she left to her white Maltese, Trouble.

7. Joseph Nunan

He's not exactly the most high profile tax evader in the world, but Joseph Nunan may hold the record for being the most ironic of our alleged cheaters. That's because Nunan was a former commissioner of the IRS (1944-1947) and in 1952 was busted for tax evasion. What sort of horrible fraud did he commit? Apparently Nunan won an $1,800 bet that Harry Truman would win the election, but forgot to claim his winnings on his taxes.

8. Wesley Snipes

In 2006, the famous actor was indicted on conspiracy charges that alleged he falsified past tax returns. (He claimed he was due a refund of nearly $12 million.) The government alleges that Snipes claimed the refunds using the "861 argument," which states not all income is taxable. They also accused him of failing to file tax returns from 1999 to 2004.

He went to court earlier this year and was acquitted of the major conspiracy charge, but the court found him guilty of the three lesser misdemeanor charges for failing to file his tax returns. He faces up to three years in prison and will be sentenced on April 24 of this year.

9. Al Capone

As head of the Chicago underworld during the 1920s, Al Capone was involved in some less than legal activities. Dubbed Public Enemy No.1, he became the focus of an intense investigation by the FBI. It was tough going for law enforcement; Capone owned nothing in his own name and used front men, making it almost impossible to get the charges the government threw at him to stick. That is, until a stack of paper would rat him out.

During a routine raid of one of Capone's warehouses, Eliot Ness and his "Untouchables" stumbled across a desk drawer containing account information for the mobster. It would be just enough to seal his fate.

The man responsible for Chicago's then-illegal alcohol trade, the corrupting of local government and the St. Valentine's Day massacre wouldn't be taken down by some lousy capital murder charge. The king of Chicago would be done in by paperwork. Capone once allegedly said "The income tax law is a lot of bunk. The government can't collect legal taxes from illegal money." But this time, the government did collect.

After his trial in 1931, Capone was ordered to pay $80,000 dollars in fines and was sentenced to 11 years in prison. He would serve only six and a half of those years, but they took their toll. While locked up, numerous attempts on his life were made and the syphilis he contracted during his youth would rapidly progress, leaving him a shadow of his former self. Suffering from syphilitic dementia, he was released 1939 and after another stint in jail, would live out the remainder of his days with his family in Florida. E-mail to a friend

For more mental_floss articles, visit mentalfloss.com

[Famspear]

On Willie Nelson, does anyone recall the details on how he got into trouble? I mean, was there any evidence that could have been used against him criminally? Was there ever any serious thought of charging him with anything?

Some people throw the term "tax evasion" around in a general way to mean "being way behind on paying your taxes" or whatever.

I never followed the Willie Nelson case closely. I'm curious as to whether the term "tax evasion" (in the 7201 sense) would have fairly applied to him.

[BBFlatt]

As I recall, Willy's problems were payroll tax related. He blamed his business manager for the shortcomings, I think it was strainght failure to file. I don't think criminal prosecution was ever seriously contemplated.

[LPC]

Most of the stories I have seen about Willie Nelson blamed his problems on bad tax shelters. I.e., he invested in some over-aggressive tax shelters and wound up owing tax, interest, and penalties that he could not pay.

He sued his accounting firm, Price Waterhouse, for $45 million for malpractice, and the suit was settled without publicity. United States District Court, Northern District of Texas, Dallas Division, No. CA-3-90-1894-P (1994).

[grixit]

Supposedly R Crumb was wiped out by an audit. He claimed, or at least his hip loving 2d alter ego claimed-- that his ex wife told the feds he had money that he really didn't.

[The Operative]

Don't forget Will Smith. Last year on 60 minutes, he told how he was a millionaire at 18 and broke at 19. He was young and didn't pay his taxes properly. The IRS took a lot of his stuff and garnished his wages from his TV show until it was paid off. It really wasn't because he was a tax protester but because he was young and ignorant of his tax liabilities.
http://dontmesswithtaxes.typepad.com/do ... me-an.html

[TheSaint]

What sort of horrible fraud did (Joseph Nunan) commit? Apparently Nunan won an $1,800 bet that Harry Truman would win the election, but forgot to claim his winnings on his taxes.

Whaaaaaat? Even in today's money (or at least as recently as 2003) casinos will give you a 1099 for any win over $600. And if he didn't make the wager at a casino, its existence would be awfully difficult to prove.

If even the guy was dumb enough to win $1800 at a casino, get a tax form, and omit it from his return, sending him to jail seems extremely petty.

I smell a snope. (Unless the guy made a lot of enemies during his tenure as IRS commissioner.)

[Leftcoaster]

What sort of horrible fraud did (Joseph Nunan) commit? Apparently Nunan won an $1,800 bet that Harry Truman would win the election, but forgot to claim his winnings on his taxes.

Whaaaaaat? Even in today's money (or at least as recently as 2003) casinos will give you a 1099 for any win over $600. And if he didn't make the wager at a casino, its existence would be awfully difficult to prove.

If even the guy was dumb enough to win $1800 at a casino, get a tax form, and omit it from his return, sending him to jail seems extremely petty.

I smell a snope. (Unless the guy made a lot of enemies during his tenure as IRS commissioner.)

Apparently, the reference for this is in something referred to as "A confidential history of the IRS Criminal Investigation Division" which was supposedly 'unearthed' by the AP in 1988. I know nothing of the veracity of this particular document, should it really exist.

[jcolvin2]

What sort of horrible fraud did (Joseph Nunan) commit? Apparently Nunan won an $1,800 bet that Harry Truman would win the election, but forgot to claim his winnings on his taxes.

Whaaaaaat? Even in today's money (or at least as recently as 2003) casinos will give you a 1099 for any win over $600. And if he didn't make the wager at a casino, its existence would be awfully difficult to prove.

If even the guy was dumb enough to win $1800 at a casino, get a tax form, and omit it from his return, sending him to jail seems extremely petty.

I smell a snope. (Unless the guy made a lot of enemies during his tenure as IRS commissioner.)

Apparently, the reference for this is in something referred to as "A confidential history of the IRS Criminal Investigation Division" which was supposedly 'unearthed' by the AP in 1988. I know nothing of the veracity of this particular document, should it really exist.

The following may be the document you are referencing (a PDF and a RTF version):

http://www.thememoryhole.org/irs/irs_75_years.pdf

http://www.thememoryhole.org/irs/irs_75_years.rtf

[LPC]

What sort of horrible fraud did (Joseph Nunan) commit? Apparently Nunan won an $1,800 bet that Harry Truman would win the election, but forgot to claim his winnings on his taxes.

Apparently, the reference for this is in something referred to as "A confidential history of the IRS Criminal Investigation Division" which was supposedly 'unearthed' by the AP in 1988. I know nothing of the veracity of this particular document, should it really exist.

The following may be the document you are referencing (a PDF and a RTF version):

http://www.thememoryhole.org/irs/irs_75_years.pdf

http://www.thememoryhole.org/irs/irs_75_years.rtf

The reference to Nunan is on page 107, and reports that Nunan was convicted of five counts of income tax evasion covering five tax years, after a 16 day trial. It also reports that the trial was "highlighted" by the testimony about the $1,800 bet with a known gambler.

In other words, the bet in question was just *one* instance of income that Nunan failed to report in *one* year. We don't know what kind of evidence was introduced for the other four years.

[LPC]

As it happened, Nunan appealed his conviction, asserting (among other things) that the evidence was insufficient to convict, so we have a published appellate opinion summarizing the evidence against him. The opinion is at 236 F.2d 576, and the following excerpt should be helpful:

It soon developed that appellant had no checkbooks or cancelled checks for years prior to 1951. He said he had no personal books or records such as a taxpayer keeps and is required by law to keep in order to substantiate the data set forth in his income tax returns and facilitate verification by those charged with the duty of checking the various items. Moreover, he employed no accountant or other person to assist him but made out his returns himself and no other person has knowledge of the basis for the various amounts stated therein, except such as are mere reproductions of figures supplied by brokerage houses or the bookkeepers of his law firms. Schedules and details plainly required by the printed instructions on the returns were completely disregarded and omitted. Appellant's special knowledge of the tax laws which might have been inferred from his law practice and his experience as Collector of Internal Revenue and as Commissioner of Internal Revenue, with general superintendence over the collection of all taxes and the preparation of the regulations, blanks and forms, was said to be non-existent. He denied that he was a tax expert and said he became a federal revenue officer only by "the chance of politics." He is portrayed in his brief and in his various statements as a sort of political lawyer and business getter. And when the investigating Revenue Agents pointed out the difficulties caused by his lack of any sort of personal records and asked him for a net worth statement, he refused to give it.

So the investigation proceeded and it was discovered that a large number of items of income had been entirely omitted from his returns for the years 1946-1950. Some of these items were small, others were far from negligible in amount. In addition, a close examination of the bank ledgers disclosed a surprising number of deposits by appellant and his wife in currency. These were periodic and continuous, over the years covered by the indictment. The following is the list of such deposits in the year 1946:

March 9 $ 300.00
March 29 300.00
April 29 460.00
April 29 200.00
April 30 500.00
May 15 500.00
May 20 550.00
August 23 750.00
August 30 700.00
August 30 750.00
September 5 860.00
September 23 800.00
September 23 500.00
September 30 500.00
October 15 500.00
October 15 550.00
November 7 500.00
November 15 250.00
December 9 900.00
December 12 600.00
December 16 750.00
__________
Total $11,720.00
==========

When appellant bought some stock in 1946 he handed over to the brokerage house one hundred and sixty $100 bills and fourteen $50 bills. A further single payment of $11,253 in currency was made in the same year.

The amount paid to one dress shop during the prosecution years was $29,500; and of this amount $12,014.86 was paid in currency.

The cash deposits and expenditures during these years totalled $98,092.86; and for the years 1945 through 1950, the Revenue Agents unearthed $160,000 of deposits and expenditures in excess of appellant's reported net income.

Appellant's explanation defies credulity. The ledger sheets of his bank for the years prior to 1937 had been destroyed, so that no evidence was available to show what his balance was in the early thirties or at any time prior to 1937. He knew that safe deposit records showed that he rented a $10 box at the Chemical Safe Deposit Company on July 1, 1935. He said in substance that he had $170,000 in his bank account in March of 1933; that, fearful of the failure of the bank, and during the next two years, he made cash withdrawals in amounts ranging between $2,000 and $5,000, and put the cash in a metal box which was kept on a shelf in the bedroom in his home; that most of this was his wife's money, that he regarded the contents of the box as belonging to them both, and that she had a key; that in 1935 he decided to put the money in a safe deposit box, which was rented for the purpose; that from July, 1935 to the end of 1944 most of the cash was kept in this safe deposit box; and that, finally, he decided to put the money back in the bank, which he did piecemeal and that these piecemeal deposits made periodically over the years 1946 to 1950, which the government claims constituted taxable income, were not income at all but the same old $170,000 fund he started with, less whatever had been expended in the meantime. This is the substance. There were countless variations as he was questioned by the United States Attorney or his assistants, or by the Foreman or by one of the Grand Jurors. The amount withdrawn from the Irving Trust Company was $100,000 or $150,000 or $125,000. The amount he left on deposit in his personal checking account, despite his fears, was $10,000 or $25,000 or $12,000. There were similar variations in his recollection of the amount of cash he kept in the safe in his law office, the amount kept at home, the amount in the metal box in the bedroom closet, and so on.

Naturally, the Revenue Agents and the prosecuting officers questioned appellant closely, especially after this belated and fantastic explanation was finally forthcoming. And appellant's pre-trial statements were supplemented by his wife's testimony at the trial. She had inherited a substantial sum from a rich uncle and an additional amount from her father. She said she had turned these funds over to appellant prior to 1932. It also appeared that appellant had made the practice over the years of turning his salary checks, as a legislator and as Collector and Commissioner, into cash; and he made other claims of accumulations of cash. We need not follow in detail the testimony of the Revenue Agent who described at the trial the course of the extensive investigation into each and every item in so far as estate and corporate and other documents and records and interviews with persons able to throw some light on real estate transfers, mortgages, and other matters, might reveal the true state of affairs. Suffice it to say that the net result, on the record as a whole, was evidence amply sufficient to warrant a finding by the jury that there never was any such fund of $170,000 or anything approximating such a sum in appellant's possession in the late twenties or early thirties.

Another phase of the government's proof was a meticulous checking of all available items in order to arrive at an approximate figure representing the amount of appellant's taxable income. This was an arduous task, as it has proved to be in many other income tax evasion cases where the absence of records and the handling of large amounts of currency have made it impossible to do more than demonstrate that the taxable income involved greatly exceeded the amounts shown in the returns. The jury was evidently satisfied that the investigation was conducted in good faith and that appellant was given the benefit of any and all circumstances favorable to his side of the case, as claimed by the Revenue Agent who testified. The evidence warranted such a finding.

The government claimed the following deficiencies for the prosecution years:

Net Income Tax
Year Deficiency Deficiency

1946 $ 42,489.13 $33,079.50
1947 19,503.69 15,583.44
1948 23,599.48 14,641.46
1949 17,818.91 11,228.34
1950 23,840.76 16,553.86
___________ __________
Total $127,251.97 $91,086.60

As to the specific items of taxable income which had been omitted from the returns, the substance of the defense was that they had been carelessly overlooked, that the amounts were not significant when compared with the totals of reported taxable income in each of the years in question, and that, if the proof of periodic cash deposits and expenditures was out of the case, the evidence of omission of specific items was insufficient to support a finding of wilful evasion.

Accordingly, we turn to the specific items, which have significance not only in themselves, but for the light they throw upon the cash deposits and expenditures phase of the case.

The mere possession of large amounts of cash or the expenditure of large amounts of cash may well arouse suspicion and speculation, but it is well settled that proof of this, standing alone, will not suffice to establish that the amounts involved constitute taxable income. See Gleckman v. United States, 8 Cir., 80 F.2d 394, 399, certiorari denied, 297 U.S. 709, 56 S.Ct. 501, 80 L.Ed. 996; Graves v. United States, 10 Cir., 191 F.2d 579, 582; cf. Holland v. United States, 348 U.S. 121, 75 S.Ct. 127, 99 L. Ed. 150; Smith v. United States, 348 U. S. 147, 75 S.Ct. 194, 99 L.Ed. 192 (semble). But when unreported receipts in the indictment years are established by independent evidence, as here, the proof that the receipts derived from a taxable source may be made by proof of a likely source of taxable income, as in United States v. Johnson, 319 U.S. 503, 63 S.Ct. 1233, 87 L.Ed. 1546; Capone v. United States, 7 Cir., 51 F.2d 609, 76 A.L.R. 1534; Guzik v. United States, 7 Cir., 54 F.2d 618; United States v. Costello, 2 Cir., 221 F.2d 668; United States v. Ford, 2 Cir., 237 F.2d 57. The variations of this pattern are legion but a common feature is the necessity for concealment and the method of concealment not infrequently is the use of currency.

Here, as we shall see, there were proofs from which the jury might find that appellant had received fees not included in the earnings of his two law partnerships. Because "of the chance of politics," he was in a position of unusual prominence, in contact with government officials of every rank and stature, and obviously eager and willing to harvest the crop when it was ripe. As a member of two law firms he shared largely in huge partnership income. But he did not hesitate to turn his position as a public figure to account in other ways. And the number of legal fees he concealed not only from the tax authorities but also from his law partners has a special relevancy, in view of his extrajudicial statement that his professional income was reported on the basis of his earnings as they appeared on the partnership books.

The opinion then goes on to identify various opportunities that Nunan had for receiving undisclosed income.

[Leftcoaster]

But all people remember is the bet?
That would seem to have been the least of his offences.
Those are some pretty big numbers for that era.

[The Observer]

Top 10 Celebrities Troubled by Their Taxes * Access Hollywood
Access Hollywood

April 15, 2008
Top 10 Celebrities Troubled by Their Taxes
Willie Nelson, Wesley Snipes and others who had problems with the IRS

LOS ANGELES - Just in time for tax day, a look at some of the celebrities who have had their own share of tax problems.

Gordon Ramsay
In 2006, this celebrity chef got his food out on time, but his company didn't pay its taxes with the same speed. He was fined 450 pounds by the British government for missing filing deadlines. At the time, a rep for Ramsay said they had already submitted the accounts and blamed the delay on "a housekeeping issue."

Buster Keaton
This famous silent film-era actor had a major fall in 1928 when he switched studios. He lost creative control of his movies and he started down the road of alcoholism. The IRS sued him for $28,000 in back taxes and he was committed to a sanitarium. Keaton eventually got his drinking problem under control, but his career was never the same.

Richard Hatch
For someone who was so smart at the game of "Survivor," its first winner made what is arguably a stupid move. Richard Hatch failed to report his $1 million prize in 2000 to the IRS. He is currently incarcerated for this crime and is set to be released in October 2009.

Annie Lebowitz
She may be one of the most celebrated pop culture photographers of our time, but last November she was accused of owing $135,916 in back taxes to the state of New York, according to The New York Post. Perhaps she should have sold Demi Moore's clothes that never made it into one of her most famous photos.

Judy Garland
In 1964, the one-time superstar's unsuccessful variety show, "The Judy Garland Show," was canceled. To add fuel to her depression, she owed $4 million in back taxes to the IRS, so they repossessed her home.

Marc Anthony
In 2007, Mr. Jennifer Lopez was ordered to pay about $2.5 million in back taxes. Manhattan District Attorney Robert Morgenthau said Anthony failed to file returns from 2000-2004, a period when he earned $15.5 million. Anthony was never charged with a crime, but two of his associates pleaded guilty to tax felonies.

Wesley Snipes
Earlier this year, the "Blade" actor was acquitted of federal tax fraud and conspiracy, but was found guilty on three misdemeanor counts of failing to file a tax return. He had faced up to 16 years in prison. According to the prosecutor, from 1999-2004, he had signed two contracts for more than $10 million that he failed to file for.

Willie Nelson
In 1990, the IRS billed Nelson for $16.7 million in back taxes. He wrote and recorded albums and sold his assets to pay them back. He was caught up by 1993, but he will not shake this on his epitaph, as this was big news at the time.

Joe Francis
In April 2007, Francis and his companies were indicted by a federal grand jury on two counts of tax evasion. The 35-year-old has built a soft porn empire filming and marketing videos of young women exposing their breasts and being shown in other sexually provocative situations. Federal prosecutors allege the companies claimed more than $20 million in phony deductions in those years, and that Francis used offshore accounts to conceal income.

Damon Dash
In 2007, the $50 million music mogul was handed a bill for more than $2 million by the state of New York, according to The New York Post. Perhaps the money was spent on the more than 1,000 pairs of sneakers he reportedly owns.