taxgirl » taxes of the rich and (in)famous

Girls Gone Wild Founder To File Bankruptcy, Blames IRS

Kelly — Thu, 19 Nov 2009 02:23:48 +0000

And here I thought my days of reporting on Joe Francis were over…

It turns out that the Girls Gone Wild founder hasn’t quite put his tax woes behind him. After taking a deal to plead guilty to two misdemeanor counts of filing false tax returns – and escaping additional jail time in the process – Francis has found himself in the hot seat again.

If you believe TMZ, the IRS has liened Francis for nearly $34 million. To clarify, the IRS claims that Francis owes tens of millions of dollars in unpaid taxes. The breakdown is as follows: $17.7 million in 2001, $11.2 million in 2002 and $4.9 million in 2003. I’m not sure how much the penalties are since I haven’t seen the actual liens but those numbers put his net income somewhere close to $100 million for those three years.

I know, I know. Here I’ve blogging tax all this time when clearly, I should be producing porn.

On the plus side, though, I haven’t had to advise TMZ that my accounts have been frozen by the IRS to the tune of $100 million (no, those numbers don’t quite make sense – just reporting as I hear it). Francis has also allegedly reported that he will file for personal bankruptcy on tomorrow.

I’m not sure how this will affect Francis’ plea deal which requires him to resolve his outstanding tax issues. I mean, it is a resolution – but I’m guessing not so much what IRS had in mind. We’ll see.

(Editor’s note: I have since seen a copy of the liens as filed with LA County. As of 11/06/2009, the liens totaled $33,819,088.14)Similar Posts:

It’s a Tax Lien, Dahling

Kelly — Sat, 14 Nov 2009 13:26:46 +0000

The woman who claims that she “never hated a man enough to give him diamonds back” may have to change her mind when it comes to Bernie Madoff. Zsa Zsa Gabor claims to have lost between $7-$10 million as part of Madoff’s scheme, leaving her with some substantial tax woes.

The 92 year old actress has been liened by the Internal Revenue Service for $118,000 for the years 2001 and 2002; the lien has been filed against one of Gabor’s mansions in California. Gabor’s lawyer, Chris Fields, says that the tax bill is part of the fallout from the Madoff scheme.

Gabor’s husband (from her longest marriage – so far) German playboy Frederic von Anhalt intends to help Gabor work out a payment plan with the IRS. Anhalt has reportedly received millions of dollars by selling the Anhalt name by adopting, along with Zsa Zsa, several men. If that sounds a little bit crazy, remember that this is the same man that claimed to be the father of Anna Nicole Smith’s baby (yeah, that’s where you’ve heard the name before). Crazy is relative.Similar Posts:

Tax Havens Suddenly Not All the Rage

Kelly — Wed, 11 Nov 2009 17:01:23 +0000

Suddenly, it’s not so fashionable to have your money in Swiss banks. That’s sooo February 2009. This season, all of the trendy tax evaders are heading somewhere else.

In the wake of increased activity by IRS to track down previously undisclosed assets (joined by the taxing authorities in countries like the UK and Germany), banks in Switzerland are reporting that the assets just aren’t pouring in like they used to. The slowdown started midyear, not coincidentally the time when the US government was exerting pressure on Switzerland to relax its banking secrecy laws.

In support of this trend, two BoA/Merrill Lynch analysts, Derek De Vries and Marc Brehm, have reported that at least one Swiss Banking Group, the Julius Baer Group, “was slightly more cautious than we expected on net new money.” In other words, Baer isn’t drawing the number of new accounts globally that they once were.

And the pendulum swings both ways. If it’s no longer attractive for Americans to do business in Switzerland, then many Swiss have countered that they will pull out of the US. Wegelin & Co., Switzerland’s oldest bank, is recommending that clients “exit from all direct investments in US securities… on the grounds of the threat of inheritance tax coupled with uncertainty as to whether one might not, one way or another, be turned into a US person.” Their gist, and I’m not making this up, is that our state of “moral and fiscal decline” means that it doesn’t make sense to invest in the US anymore.

So it’s time to panic, right? Not at all. Pulling out of investing in US-controlled securities is an interesting recommendation but not a terribly viable one. Like it or not, even in the midst of a recession, the US economy is a huge part of the global scene.

It’s kind of like how you’ll continue to see Paris Hilton in the papers. Even if you don’t like her, she adds value to an event – even if it’s just added publicity.

In other words, they don’t have to like us but I think the Swiss will still invite us to their parties.Similar Posts:

Girls Gone Wild Founder Gets Plea Deal

Kelly — Sat, 07 Nov 2009 13:45:13 +0000

“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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UBS Client Prosecutions Continue

Kelly — Sat, 31 Oct 2009 12:03:05 +0000

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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A Method to His Madness? Clifford Smith Arrested on Tax Evasion Charges

Kelly — Tue, 06 Oct 2009 23:40:41 +0000

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:

Richard Hatch Wants to Go Home

Kelly — Wed, 30 Sep 2009 11:52:35 +0000

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:

“Girls Gone Wild” Founder Takes Plea

Kelly — Wed, 23 Sep 2009 20:49:18 +0000

“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:

Mayweather Gets a KO by IRS

Kelly — Wed, 23 Sep 2009 02:13:18 +0000

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:

Girls Gone Wild Founder To File Bankruptcy, Blames IRS

Football Legend’s Earrings Taken to Pay Taxes

Kelly — Sun, 20 Sep 2009 13:49:14 +0000

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.

(Image in the public domain.)Similar Posts: