It’s got to be hard to be a Dodgers fan these days. All-Star center fielder Matt Kemp just came off the DL only to find himself injured again this week. Injuries continue to plague other players including Mark Ellis, Ted Lilly, and Juan Rivera. And the Dodgers have little money to buy their way out of this one as their finances continue to dwindle amid charges that the former owners, the McCourts, plundered the team during their tenure, using it as their personal ATM.
(And yet the Dodgers are sitting on top of the National League West – there’s really no need to point out that my beloved Phillies are at the bottom of the National League East.)
It seems that Dodgers fans aren’t the only ones who want to know what happened to the team’s finances. The Los Angeles Times is reporting that a federal grand jury is investigating possible criminal misconduct of the Dodgers relating to the financial (mis)management of the team. The news was initially reported on Wednesday morning by Daily Journal writer Ben Adlin who noted that prosecutors in the tax division of the Los Angeles U.S. attorney’s office are handling the matter.
So wow, right? Bad behavior and bad judgment may be one thing but criminal conduct is another.
And it gets worse. It appears that the investigation is focused not only on your run of the mill fraud but on federal and state income tax issues (the MLB has already confirmed via the bankruptcy petition that the Dodgers owe the City of Los Angeles nearly a quarter of a million dollars in back taxes).
Jamie McCourt had previously alleged in the nasty, public – did I mention nasty? – divorce of the former owners that the couple had paid no federal or state taxes for at least six years, beginning 2004, the year the McCourts bought the Dodgers. That was as of last year. There’s no word on whether any taxes had been filed or paid for 2010 and/or 2011. Last year, Frank McCourt’s accountant confirmed that the McCourts and/or related entities were under examination for 2006, 2007, and 2008. That was confirmed by Major League Baseball (MLB) Commissioner Bud Selig last year.
Of course, the IRS isn’t going to speak publicly about any ongoing tax investigations. But as I’ve noted before, in most cases, the behavior has to be fairly reprehensible before it turns criminal.
If you believe the MLB, the behavior is pretty awful. Among other allegations, the MLB alleges that Frank McCourt “systematically stripped the [Dodgers] of assets and liquidity for his own personal uses.” The MLB also accused McCourt of “destroying a storied franchise by using it as his personal piggy bank” which took the team down “a path of destruction.” How much of a piggy bank? The MLB alleges that Frank McCourt – who holds a degree in economics from Georgetown University – improperly converted as much as $189 million. If that’s true – and if he didn’t report it as income – that could result in a pretty sizable tax bill and potentially, criminal charges.
The McCourts lived lavishly after buying the Dodgers. They reportedly bought a $20 million home and spent nearly that much ($14 million) to bring it up to snuff. They later spent nearly $50 million to buy his and hers Malibu beach houses (there’s a Barbie joke in there somewhere, I know it). At the time of her divorce, Jamie McCourt claimed that her monthly expenses ran nearly a half-million dollars. She further stated that her lifestyle had been financed largely by the Dodgers with many of their expenses “paid directly” by the team or related entities.
Those words, if true, may come back to haunt her.
