Taxable Talk

Sometimes you read a story and wonder if it’s really true. Such was the case when I read this DOJ press release on Matthew and Sandra Zuckerman.

It starts like many cases: The Zuckermans didn’t like filing and paying taxes, so in 1986 they stopped filing. This continued for at least 24 years. If you don’t do anything that gets yourself well known, and stay in the shadows, it is possible (but still quite illegal) to not file and pay income taxes. Mr. Zuckerman, though was very successful.

He formed a corporation titled Silicon Valley New Issues that specialized in ‘reverse IPOs.’ (An IPO is an initial public offering of stock to the public. A reverse IPO is where a company purchases an already public shell company so that it can become a public company.) Mr. Zuckerman formed an interlocking web of businesses and trusts so that his income wouldn’t be traceable to the IRS. His personal wealth was quite large, with a mansion in Woody Creek, Colorado, and another $1.8 million home in Toluca Lake, California.

It is one of those companies, Hyperpanel University, Inc., which drew my attention to this case. All corporations have to have a Board of Directors. That board handles various business items of the corporation. Now, in a tightly controlled corporation you might just have one board member–yourself. But Mr. Zuckerman elected a strategy that I haven’t seen before (and I doubt I’ll see again): He named his pets as board members. A helpful hint to anyone who is contemplating such a move: Board members do need to be human beings. (Mr. Zuckerman’s dog and cat are no longer board members of Hyperpanel.)

In the end, all of the maneuvering just delayed the inevitable. Mr. Zuckerman pleaded guilty to one county of tax evasion earlier this year; last week, his wife, Sandra, pled guilty to one county of willful failure to pay income tax. They’ll be sentenced later this year. There’s no word on Fido and Lulu being charged.

This entry was posted on Sunday, June 1st, 2014 at 8:44 pm and is filed under Tax Fraud. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.