“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.

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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?

Technorati Tags:
IRS, Jeffrey Chernick, Matthias Rickenbach, tax evasion, Steven Michael Rubinstein

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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.Similar Posts:

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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?Similar Posts:

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“Girls Gone Wild” founder Joe Francis has agreed to a plea arrangement that will significantly reduce his outstanding tax liability and keep him out of jail (for a bit – I’m making no promises about what he’ll do next). Francis has agreed to plead guilty to two counts of filing false tax returns and one count of bribing Nevada jail workers.

Francis, who has already spent 301 days in jail, will receive credit for time served. In addition, he will receive a year of supervised release and pay a quarter of a million dollars in restitution. The agreement, which slashed the potential jail sentence for Francis, doesn’t completely put an end to Francis’ tax woes but does require tax issues relating to Francis or his companies from 2002 to 2008 to be handled in civil or administrative arenas.

Francis had been accused of tax evasion relating to his business. Francis’ attorney, Brad D. Brian, has said – and I’m not making this up – that prosecutors “didn’t understand Francis’ business model” and the expense related to the “Girls Gone Wild” brand. Similar Posts:

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Boxer Floyd Mayweather Jr. didn’t quite walk away from his bout with Juan Manuel Marquez with all that he had hoped for… That $10 million prize money was chopped in half after he agreed to pay $5.6 million in back taxes to the IRS. The agreement put the breaks on a potential levy on Mayweather’s winnings for back taxes; the IRS had sent the Nevada Athletic Commission a notice of levy on September 4, about two weeks before Mayweather’s fight in an effort to collect the taxes due. They rescinded the levy notice about a week before the fight after reaching an agreement with Mayweather.

However, Mayweather’s tax attorney, Jeffrey Morse, claims that the feds never planned to take the money. Morse also said he expected the IRS to release the $6.17 million lien filed last year against Mayweather (that hasn’t happened yet). The levy was valued at about $5.6 million.

Despite Morse’s prepared statements PR nonsense characterizations about Mayweather’s intentions to become or remain compliant, Mayweather has quite a history with the IRS. Liens have been filed against Mayweather in prior years after he failed to pay what he owed in 2001, 2003, 2005 and 2006. This most recent lien was for 2007.

Mayweather also owes the State of New Jersey almost $200,000 for unpaid taxes (that debt has not yet been paid).

In addition to tax woes, Mayweather’s dance card has been quite full: he’s been liened by a number of homeowner associations and has at least one lawsuit pending for failing to make payments owed on a car. It seems that the boxer, who likes to call himself “Money”, may be able to manage himself in the ring but can’t seem to managed his money out of it. Similar Posts:

None Found

Diego Maradona, formerly referred to by legions of football fans as “the Golden One”, lost more than weight when he checked into a weight loss clinic at the Hotel Palace health spa in Merano, Italy. The 48 year old former football (yeah, that’s soccer to my US readers) standout checked into the spa in an attempt to get his weight under control. While he was there, the Italian police confiscated the earrings he was wearing; the three diamond earrings were estimated to be worth just under $6,000.

That may seem like a lot – but it’s just a fraction of the more than 31 million euros (about $45 million) that Maradona allegedly owes. Tax authorities in Italy claim that Maradona accrued the taxes in the 80s and 90s when he played for the league club Napoli. His time with the team earned him a spot as on the list as one of the greatest players of all time. An internet vote for FIFA Player of the Century award tied him with football great Pelé.

You’d think Maradona would learn his lesson. Three years ago, Italian police confiscated two Rolex watches worth about $15,000 when he showed up to play in a benefit match. The police were allowed to make the seizure due to a court order that authorizes authorities to take anything “within plain sight” that belongs to Maradona.

Maradona, for his part, has taken the Richard Hatch approach and claims that has always insisted that the taxes are the responsibility of team Napoli as his employer and not his. (Psst, Maradona, it didn’t work for Hatch, either.)

Maradona is no stranger to controversy. He has previously faced suspensions and expulsions for failing doping tests for cocaine and ephedrine. Maradona’s history of drug abuse lead to significant problems with his weight. After a stomach stapling operation failed, Maradona headed to the Dolomites to try out a new weight loss regime… It seems that he lost a lot more than he bargained for.

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Or least his people did.

Rapper Ludacris, whose real name is Christopher Brian Bridges, made 20 families who needed a hand up pretty happy this week. He partnered with Nissan South, a car dealership in Atlanta, to give away 20 cars to folks in need as part of his own stimulus package.

The giveaway worked like this: to qualify for the free cars, contestants submitted an essay to Ludacris’ Foundation. Applicants were asked to write a one page essay on why they feel they deserve the car. To qualify, applicants had to be at least 18 years old, have a valid GA drivers license and not currently own a car.

Roberta Shields, President of The Ludacris Foundation, explained: “This year we want to do something to help youth and families manage during these tough economic times. Having a vehicle to get back and forth to work and daycare can make the difference in getting and keeping a job.”

More than 4000 folks vied for the used vehicles, which also included free gas for 30 days. The winners were responsible for the rest: tags, registration, insurance and – yes – taxes. After the winners of Oprah’s car giveaway learned the hard way, Ludacris made it clear on his website that winners were responsible for paying any applicable taxes.

The winners of the cars were visibly moved. Crystal Beauford, a single mom and college student, used to ride two buses to get to work. Now the proud owner of a used Saturn Ion, she said, “This is going to help me out so much,” she said. “It’s a blessing.”Similar Posts:

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I feel like I should send Richard Hatch a fruit basket or something for making it so easy to find things to blog about…

As you know, Richard Hatch has been serving time for tax evasion for, among other things, not paying the tax on his “Survivor” winnings. He requested and was granted house arrest for the remainder of his sentence. But apparently, he doesn’t quite get the idea behind house arrest… To leave the house, you have to ask permission from the federal Bureau of Prisons. Only, he didn’t quite do that.

He opted to do three television interviews on Tuesday, all three for NBC-affiliated shows, including the “Today” show. He only asked permission to do the one. So he’s back in the slammer.

During the interviews, Hatch repeatedly claimed that he was innocent of the tax evasion charges. He says that he will pay the IRS when he receives a bill (which he says has never happened). And he now says that his conviction is the result of “prosecutorial misconduct” and discrimination because he is gay. Right. Not the million dollars he chose to not report. Just because he’s gay.

Oh Richard, Richard, Richard…

You can watch the entire interview here (about 7-1/2 minutes long):

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Rumors are swirling around the possibility of manslaughter charges may be filed in the death of pop superstar Michael Jackson. Jackson’s personal doctor, Dr. Conrad Murray, is considered a “person of interest” in the case but has not been charged.

Raids at Dr. Murray’s office and storage unit in Houston on Wednesday raised eyebrows. Among the items removed from the storage unit by federal officials were notices from the IRS. You can read the entire list of items removed from the storage shed as evidence here, downloadable as a pdf.

Was Dr. Murray in some kind of trouble with the IRS? So far, there is no clear answer and the IRS does not comment on pending matters.

However, there has been speculation that Dr. Murray was in considerable financial difficulty. In addition to defaults in home loans and unpaid child support, there are at least three state tax liens which have been filed in Arizona and California against Dr. Murray, one as recently as 2003. Murray’s Nevada medical practice, Global Cardiovascular Associates, was ordered last year to pay court judgments totaling nearly half a million dollar to vendors and banks; at least two other lawsuits against the company are still pending.

Normally, no one would care about any of this. So the guy had some financial troubles, who cares? Apparently, the feds do. Speculation continues to build that Dr. Murray may have been involved in supplying Michael Jackson with unnecessary prescription drugs; if so, his activities may be linked to his financial troubles.

The doctor made headlines after it was revealed that he was the last person to be seen alive with Michael Jackson. Murray was considered to be Jackson’s full time personal doctor; he was hired by AEG Live to accompany Michael Jackson to London for his comeback series of concerts.

All of that said, why the feds would seize what would seem to be unrelated tax documents from Murray’s storage shed remains a mystery for now. I’ll update you as information becomes available.Similar Posts:

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