There’s Trouble in New York. And he’s rich.
Trouble, the beloved Maltese belonging to Leona Helmsley, is the beneficiary of a $12 million trust fund, according to her will, which was made public Tuesday in surrogate court. Helmsley’s brother, Alvin Rosenthal, was named Trouble’s caretaker.
Helmsley’s only child, Jay Panzirer, died at the age of 42 of a heart attack. Helmsley successfully sued his estate for the repayment of borrowed funds. Jay’s wife, Mimi, and Helmsley were not on good terms after Jay’s health (Helmsley had Mimi evicted). There is speculation that Helmsley’s relationship with Mimi lead to a troubled relationship with Helmsley’s grandchildren: two of the four, Craig and Meegan Panzirer, were disinherited in Helmsley’s will.
The majority of Helmsley’s estate will be sold and the money distributed to the Leona M. and Harry B. Helmsley Charitable Trust. The tax savings for the donation will easily be in the billions.
You can read the will in its entirety here.
Maybe it’s the line of work that I do – I do a lot of estates related work – but I’ve often thought about how I might be remembered after I’m gone. Maybe that seems morbid to some folks, but it’s something that I deal with week in and week out, how folks are remembered and essentially, how, in the end, your life is generally summarized in a few words on paper.
I guess that Leona Helmsley didn’t care how people viewed her. She was known as “the queen of mean” throughout much of her life and even so at death. She died today, at age 87, of heart failure at her summer home in Greenwich, Connecticut. The headlines all scream about the death of “the queen of mean.” I half expect a little song and dance a la The Wizard of Oz.
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Helmsley’s image as “queen of mean” was forever cemented in popular culture when, during her tax evasion trial, a former employee testified that Helmsley said: “We don’t pay taxes. Only the little people pay taxes.” By “we”, she meant not only herself but Harry Helmsley, who she married in 1972, her fourth marriage (by contrast, Harry left his wife of nearly 30 years for Leona). Harry was, by then, one of the richest men in the world. Together, Harry and Leona built a vast empire, making the Helmsleys incredibly wealthy. In 2007, despite fines and lawsuits, her fortune was estimated at $2.5 billion.
Perhaps the Helmsley fortune is what it is because of their business practices. She reportedly remarked, “That’s how the rich get richer,” after making a sales clerk rewrite a bill for earrings to save $4 in sales tax.
But it was how she commingled her home and business practices that became her undoing, of sorts. In 1983, the Helmsleys bought a home Greenwich, Connecticut. The cost of the property was $11 million – with another $8 million in renovations. Helmsley was reportedly frustrated by the pace and quality of the renovations and balked at paying the bills, including a number of contractors. The contractors filed lawsuits against the Helmsleys alleging, among other things, that work to the Helmsleys’ personal home was being charged to other properties as a business expense so that the Helmsleys could lower their tax bills.
The lawsuits caught the eye of the IRS. After a lengthy investigation, in 1988, the Helmsleys were indicted on 188 counts of tax fraud. Leona also faced federal charges of extortion and mail fraud.
By the time the case went to court, Harry’s health had deteriorated considerably. Nearing age 80, Harry was deemed incompetent to stand trial. Leona, however, went on to trial, was eventually convicted of evading $1.2 million in federal taxes. She was convicted of 33 felony counts of fraud, including mail fraud, tax evasion and filing false tax returns. Initially, she was sentenced to 16 years in prison and fines of $7 million. Upon appeal, her sentence was reduced to four years in prison, though she served only a total of 21 months. She was released from prison in 1994 and was sentenced to community service – which, allegedly, her employees performed for her.
She lived the remainder of her years building her wealth – I guess we all need a hobby. By most counts, she died with only few friends and many enemies.
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Tax season has finally wrapped up more or less for individual taxpayers – well, except for those of you (like me) with extensions. After sorting through my inbox filled with questions from panicked last minute filers, I decided that what I really needed to post was a “What Not to Do” list. So, enjoy this list of how to get caught, taken from the real life exploits of those convicted or indicted for cheating on taxes:
1. Fail to file taxes for your brother like you promised you would… when your brother is married to Jennifer Lopez. Marc Anthony’s brother has pleaded guilty to tax felonies for failing to file tax returns for the singer’s income for five years, and for the singer’s companies for four years. Marc Anthony escaped prosecution for failing to file but is responsible for the tax, interest and penalties due.
2. Gloat about the amount of money that you make – and don’t pay taxes on. No, Richard Hatch laughing it up with Howard Stern about how he didn’t pay taxes on his Survivor winnings (um, Richard, don’t you know that people listen to the radio?) wasn’t the first case of a big mouth landing a taxpayer in trouble. Leona Helmsley’s might have felt important by claiming “We don’t pay taxes. Only the little people pay taxes.” But her big mouth landed her convictions for conspiracy to defraud the United States, tax evasion, filing false personal tax returns, assisting in the filing of false corporate and partnership tax returns, and mail fraud. Oh yeah, and the title “Queen of Mean.”
3. Grossly understate your earnings. Washington telecommunications mogul Walter C. Anderson plead guilty earlier this year to tax evasion charges for failing to pay more than $200 million in taxes. In 1998, Anderson received than $126 million and yet reported a paltry $67,939 on his 1040. Not to be outdone, Wesley Snipes filed amended 1997 return claiming that his adjusted gross income as originally reported of $19,238,192 was actually zero.
4. Market your tax evasion scheme as “approved by the IRS”. Someone apparently fell asleep during Marketing 101 in college… While I grant you that the IRS probably doesn’t have the resources to investigate every single time someone invokes their name, using a former IRS agent to promote your scheme as approved by the IRS is just begging for trouble. C’mon. Even the IRS knows how to use Google.
5. Make deals with politicians. Just ask Jack Abramoff. He was convicted in 2006 of numerous charges involving his role in accepting kickbacks and bribes in exchange for favors. Even kickbacks and bribes are taxable. And in Mr. Abramoff’s efforts to erase the trail leading back to him, he filed false documents and false entries to financial books and records, and filed a false income tax return in 2002, “all for the purpose of concealing additional unreported taxable income received by or on behalf of” himself.
Of course, all of this pales in comparison to the top way to cheat on your taxes and not get caught…
1. Win a government contract.
