It’s part one of a taxgirl double-header! I’m wrapping up my summer of movies and tax with two more features.
The first is Blow, the 2001 movie based on the real-life story of George Jung, Pablo Escobar, Carlos Lehder and the Medellín Cartel. The film’s title comes from a slang term for the drug, cocaine.
I really liked this film – and I didn’t expect to. I’m not all that interested in the drug culture (go figure) and I’m not a huge fan of Penelope Cruz, to say the least (I don’t “get” women who are not completely frightened away by Tom Cruise). But it was a fascinating look at this world that I don’t understand and didn’t expect to relate to. I tend to think of those in the drug culture as less than human (fair or not) and Johnny Depp’s portrayal as someone torn between these two worlds was just brilliant – and even made me a little (but just a little) sympathetic.
The Background
We’re introduced to George Jung as a young child boy with his parents Fred (played with appropriate paternal dismissal by the always fab Ray Liotta) and Ermine (Rachel Griffiths). As with many families in the 1960s, George’s father pays the bills and Ermine stays home. Ermine is, however, not content with the world that Fred provides and longs for something more. Unfortunately, she also voices her displeasure at Fred on a pretty regular basis, which makes an impression on young George. Eventually, Fred’s fortunes take a turn for the worst and the family is forced to declare bankruptcy. Lucky for him, a run of the mill bankruptcy generally has no tax consequences. IRC §108 excludes the discharge of debt in bankruptcy from its definition of cancellation of debt income. Debt that is canceled outside of bankruptcy can result in income taxed to the debtor.
Soured at this turn of events, George vows that his own family will never meet a similar fate.
The Opportunity
Eventually, George Jung (played as an adult by the remarkable Johnny Depp) ditches the cold northeast for sunny Southern California. George and his friend “Tuna” (played by Ethan Suplee, now on NBC’s My Name is Earl) get an apartment on the beach – but have no way to pay for it. The drug scene is pretty well established at the beach – it seems that everyone is smoking pot. Tuna convinces George that selling pot is their ticket to riches.
George gets started in the trade by meeting Derek Foreal (played by Paul Reubens – yes, he’s Pee Wee Herman). Derek teaches George and Tuna the tricks of the trade and before long, they are rich. Chances are, they aren’t reporting this income to the IRS but they should: illegal income, such as money from dealing illegal drugs, must be included on federal form 1040, line 21, or on Schedule C or Schedule C-EZ (federal form 1040) if from self-employment activity. [Editor’s note: this is, by the way, my favorite provision in the Tax Code!]
When a friend comes west for a vacation, he is impressed by their operations. He complains about the lack of good pot in the northeast and they develop a plan to try their luck in the northeast.
The idea turns out to be sheer genius. They have practically no competition and expand rapidly. Like most businesses, they streamline their services and decide to buy directly from the source: Mexico.
The Convictions
With his newly acquired wealth, George returns home to visit his parents and show off his new fiancee. After visiting his parents, George attempts to smuggle pot into Chicago. He is caught and sentenced to jail. While out on bail, he finds out that his fiancee is dying of cancer; he jumps bail to spend time with her. She dies and George returns home to visit his parents. While at his parents, he is again arrested.
The Introductions
George serves three years in federal prison in Danbury, Connecticut. There, he meets Colombian drug dealer Diego Delgado (played by Jordi Molla). Diego asks George what turns out to be a fateful question: George, do you know anything about cocaine?
Diego convinces George that the real future in the drug business is cocaine. After George’s release from prison, George looks Diego up in Colombia. The two quickly become involved with Pablo Escobar (played by Cliff Curtis), who controls nearly all of the Colombian drug cartels. George becomes Pablo’s US connection to the United States, and as a result, incredibly rich. At one point, 85% of the cocaine going into the US came through him.
To hide his money, since he would have been required to report the income to the US taxing authorities, George sets up an offshore bank account. While offshore bank accounts are not illegal (and are used for legitimate means such as estate planning and asset protection), US citizens are required to report income from those accounts on their tax returns.
The Spiral
George marries a Colombian trophy wife named Mirtha (played astonishingly well by Penélope Cruz). Mirtha is beautiful, passionate and um, has a little problem with cocaine. Since Mirtha is Colombian, it’s worth mentioning that she would not have been entitled to the unlimited marital estate and gift tax deductions in place for citizen spouses; if George had died, Mirtha would have to elect US citizenship or place the money in the US (in a QDOT) to have the benefit of deferred taxation.
George doesn’t die, however, and sets up a palace of sorts in southern California. He flies his parents in for a visit. His parents realize that he is continuing in the drug trade but look the other way – for different reasons. Ermine is thrilled with his material success. Fred says that he just wants George to be happy.
The drug trade in Colombia is incredibly violent. George witnesses his first murder when Pablo kills an informant himself. Later, Diego and his cronies beat George up over a business dispute. George, tiring of the violence, wants out.
By this time, George is addicted to both cocaine – and the money it brings him. His wife, Mirtha, is likewise addicted, even doing cocaine while pregnant. George has a heart attack shortly after his daughter, Kristina, is born.
Separate Lives
The drugs and the violence finally get to George and he decides that he wants out. He dedicates his time to being a father and lives off of the spoils of his ill-gotten gains. The family life seems to sit well with him and he settles in nicely.
Mirtha is not so excited about their new life. She continues her coke habit, by now a full-blown addict.
For George’s birthday, Mirtha throws George a huge bash. During the party, there is a drug bust – the feds had been onto them all along. In a particularly poignant scene, in an effort to save his family from jail, George cuts a deal with the feds. But desperate not to return to jail, he flees again while on bail.
He visits his parents with his family to tell them that he would be going away for a while. They know what has happened and are understandably upset.
The Losses
George loses his millions practically overnight. Mirtha, who has grown used to the finer things in life is not pleased. She lectures George about their finances (shades of Ermine and Fred) in front of daughter Kristina (played by Emma Roberts, of Nancy Drew fame). George reassures Kristina that he’ll take care of her.
George is predictably caught and sent back to prison. While in prison, George finds out that his father is dying. Prison officials would have allowed George to say goodbye to his father but his family would not allow it. George said goodbye in a taped letter – a voice-over in the film.
Also while in prison, Mirtha announces to George that she is divorcing him and intends on getting sole custody of Kristina. She also demands child support payments. Child support payments, it’s worth noting, are not deductible to the payor – alimony, on the other hand, is.
George has practically no relationship with his daughter. After his release from prison, he tries to rebuild the relationship with Kristina. He asks a suitably white trashy, chain-smoking Mirtha if he could have custody of Kristina. She says, in essence, if he paid her, she would consider it.
The Last Stand
George doesn’t have any money to pay Mirtha – and has only one real skill. He decides to make one last run in order to score enough money to pay off Mirtha and return to California with Kristina. He tells Kristina to wait for him after school and he will take her away to California. A hopeful Kristina packs her suitcase and waits.
The drug trade is, as always, unpredictable. The run goes well but George is double-crossed and is arrested again. He is sentenced for up to 60 years in prison.
While in prison, George has a visitor. It is his daughter, all grown up (and played by Jaime King). She hugs him and all is well.
The Reality
Only all is not well. George imagined the entire visit.
The film ends with George in prison. We are told via text on the screen that George Jung was sentenced to Otisville Correctional Facility until 2015 with no possibility of parole and that his daughter has never visited him. The screen then fades to black.
The Skinny
The movie was nominated for review by Jon. Remember that your comments will count as votes for Jon – and he can win some great prizes. So tell me what you think about the movie, the review, the locale… Did you have sympathy for the real-life George?
And if you want in on the action, be sure and leave your suggestions on the original post – or send me an email.
Nice write up. I enjoyed the movie very much also, especially the sound track. Unfortunately, the actual life of G. Jung was quite different, after Carlos Lehder was arrested and brought to the US, George spent several days on the witness stand sealing CL fate and then George was set free with time served! He was then arrested twice after that for smaller time drug sales and given another I believe it was 22 years. Funny thing is that Carlos Lehder is now reported to be in the witness protection program and living it up on the Gov. dime. There is currently no record of him in any Federal Prison or so I’m told. 6 of one, half dozen of the other as I see it, either way its a fascinating look at American culture from the 70’s on. Fortunately for the US, you can’t do things with cash today, like you could then! Still I wonder how that guy in Mexico recently felt when they searched his house and found 204 million in mostly US dollars.
Good movie.
Mark Herpel
DigitalMoneyWorld
Lots of convoluted goings on. . . and, oh yeah, a very HOT Johnny Depp!
Totally agree with MJ all the way around. Hot Johnny – and very convoluted movie! Marvelous review Kelly – and I agree with you about the Penelope/Tom Cruise thing. Ick. 🙂