“Girls Gone Wild” founder Joe Francis feels he finally got a break when a federal judge okayed a deal that Francis struck with prosecutors. Under the agreement, Francis was credited with 301 days already served and sentenced to one year of probation.
The plea deal was struck after Francis learned that a key witness, Francis’ former accountant, had withheld information from his defense team at trial. Francis was originally indicted on tax evasion charges in 2007 stemming from a number of income omissions and false deductions. He pleaded guilty to two misdemeanor counts of filing false tax returns and one count of bribing Nevada jail workers.
“I think we won that one,” Francis said after the hearing.
The former bad boy was polite during the hearing, answering questions as asked. It was quite a turn-around from the belligerent persona he had maintained since the charges were first brought against him in 2007.
After the hearing, he kissed his mother.
Apparently he really does kiss his mother with that mouth.
Jeffrey Chernick, a toy salesman out of New York, was sentenced on Friday to three months in prison for hiding millions of dollars from the IRS. Upon his release, Chernick will serve six months’ house arrest and six months’ probation. The judge did not impose an additional fine as Chernick is already subject to more than $4.5 million in civil penalties for filing a false tax return.
Chernick becomes the second UBS client to be sentenced in the scandal. Earlier in the week, Steven Michael Rubinstein was sentenced to three years’ probation, one year of house arrest and a$40,000 fine.
I noted at the Rubinstein sentencing that I felt that the punishment was light. US District Judge James Cohn apparently felt similarly, noting with respect to these specific cases, “The concept that tax evaders can get probation sends the wrong message… Some amount of incarceration is warranted.”
Chernick cooperated with authorities, which may have lessened his sentence: he had faced up to three years in prison. But even prosecutors sought leniency for Chernick, suggesting that his cooperation played a “significant and early step” in the UBS investigations, offering information about other taxpayers and banks.
In addition to pleading guilty to tax evasion, Chernick also admitted to paying a bribe, arranged by attorney Matthias Rickenbach and Swiss banker Hansruedi Schumacher, to a Swiss government official for information about which UBS accounts would be given to US authorities. That investigation is ongoing and it will be interesting to see the reach of the bribery scheme.
Chernick began setting up offshore accounts as early as 1981 in order to hide commissions on toy sales from the IRS. Over the years, he moved money from account to account and otherwise attempted to conceal his assets.
Interestingly, Chernick made an effort to sign up for the IRS’ voluntary disclosure program but did not qualify. Taxpayers who were under investigation or already facing charges did not qualify for the program.
Expect more high profile disclosures over the next few weeks. Clearly, the IRS hopes to send a message. The real question is: who’s getting it?
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IRS, Jeffrey Chernick, Matthias Rickenbach, tax evasion, Steven Michael Rubinstein
Rapper and Wu-Tang Clan member Method Man was arrested Monday on tax evasion charges stemming from an alleged refusal to pay personal income taxes. Method Man, whose real name is Clifford Smith, has reportedly failed to pay taxes from 2004 to 2007. His tax bill for the period was just $32,799 plus penalties and interest.
That actually begs the question: why an arrest? One of the charges is said to be a felony violation of “repeated failure to file personal income and earnings tax.” Failure to pay is a misdemeanor. And yet, Staten Island District Attorney Daniel Donovan has said the rapper will be “aggressively investigated and prosecuted” if he’s found guilty of the charges.
Is he teaching Method Man a lesson or is there something more?
If you voted something more, you and I are on the same page. A few months ago, the police paid Method Man a visit for, you guessed it, the same thing. In March, the Department of Taxation showed up on Method Man’s door with a number of police officers. At the time, the rapper was said to owe more than $50,000. And he had a great explanation for it:
Because I got high, I forgot to pay. It was stupid. I’m an idiot for that.
The government took his 2008 Lincoln Navigator to satisfy part of his obligations. Method Man insisted that he could have paid had he not been high, declaring, “I got plenty of money!”
Six months later, apparently he hasn’t worked out his tax and “other” issues. And I’m guessing the NY Department of Taxation doesn’t find it very funny quite as funny as he does. He faces up to four years in prison if convicted of the charges.
Richard Hatch is not having a good year. After qualifying for early release from federal prison, where he was serving time on tax evasion charges, he was allowed to spend the remainder of his sentence at his sister’s house as house arrest. Hatch, not necessarily being the most conventional guy, apparently had a different interpretation of his media appearance rules than the Bureau of Prisons did: his recent stints on TV and radio landed him in hot water when he failed to get the proper permissions.
And Hatch went back to jail. He then asked to be able to return to his sister’s house to serve out the remainder of his sentence. A federal judge denied that request.
Now, Hatch is appealing that decision and he has a surprising ally: the ACLU. The ACLU has been concerned about Hatch’s treatment since returning to jail among allegations that Hatch is being punished for speaking out against prosecutors in his case. If you recall, Hatch doesn’t actually think he went to jail for cheating on his taxes – he told Matt Lauer that it has everything to do with being gay.
Hmm… So what’s Joe Francis’ excuse?
