Taxable Talk

The trial of Wesley Snipes and his tax advisors continued in Ocala, Florida last week. The prosecution rested its case on Friday; the defenese will begin presenting its evidence on Monday. The last government witness, IRS agent Steward Stich, testified that Mr. Snipes earned over $37,897,053 from 1999 through 2004 but didn’t pay a penny in taxes.

Earlier, testimony showed that Mr. Snipes sent a 600 page letter to the IRS. Why? Joe Kristan takes up this part of the story:

If you were indicted on federal tax charges that could put you in prison for years, would you:

a). Pour yourself a stiff drink.
b). Flee the country
c). Call a good lawyer and devote your time to preparing your defense
d). Write a 600-page letter to the IRS telling them not to mess with you.

Wesley Snipes chose option “d,” according to testimony in his tax evasion trial as reported at Ocala.com:

After being indicted in 2006, actor Wesley Snipes sent a document to the Internal Revenue Service declaring he was a “nonresident alien” of the United States, refuting his Social Security number and warning that continued prosecution could lead to professional consequences for federal employees.

Among other things, the letter claimed the IRS deceives people to “terrorize, enslave, rape or pillage” taxpayers.

Don’t be silly. Terrorize and pillage, sure. Enslave and rape? I haven’t seen that out of the IRS.

The IRS does many things, but a picture of a bunch of accountants laying siege on a Dark Ages town is just hard to believe.

The defense did get one ruling to go there way on Friday. Accountant Kenneth Starr was ordered by Judge William Terrell Hodges to provide the information requested of him by the defense or be held in contempt of court. Mr. Starr has ten days to comply.

As to what to expect from the defense, I have no idea. Defense attorney Robert Barnes said there’s a chance that Mr. Snipes might testify. There’s speculation that testimony will focus on Snipes’ advisors providing bad advice (i.e. telling people they didn’t have to pay taxes). The problem with that is that if you get bad advice you don’t have to take it. Snipes was told by others to pay his taxes; I doubt that line will work. Additionally, we may see celebrity testimony (though Judge Hodges hasn’t yet ruled whether that testimony will be allowed).

Meanwhile, Robert Bernhoft, one of Snipes’ attorneys said, “It’s the weakest conspiracy case I’ve ever seen in my life, that’s all I can say. Were looking forward to defense, were looking forward to closings and we’re looking forward to vindication.” And the trial likely will conclude next week as the defense now only expects to put on evidence for two to three days.

It should be an interesting week in Ocala.

The last two days of the Wesley Snipes trial on tax evasion and conspiracy charges has been full of paper. The government has been entering into evidence numerous documents that they claim show proof that Mr. Snipes has evaded taxes.

Today, Ocala.com reports that IRS Agent Cameron Lalli testified, identifying various documents. It’s not exciting, but the government is building a paper trail so that the jury can see exactly what happened. Dotting the i’s and crossing the t’s is necessary for convictions.

Meanwhile, it appears that the trial may last a couple more weeks. Defense attorney Robert Barnes “…proposed introducing several exhibits that went as high as [number] 308.” That’s a lot of exhibits. The prosecution has objected to all of those exhibits; Judge William Terrell Hodges appears to so far have allowed one of the 308 to be introduced. The defense will have to wait for Judge Hodge’s ruling on the other 307 exhibits.

An online betting site has posted odds on whether Wesley Snipes will find his way to ClubFed or not. According to Gambling911.com, BetCris.com has posted these odds on Mr. Snipes:

Will Wesley Snipes be convicted of tax fraud?
Yes 1/10
No 3/1

Wesley Snipes’ tax fraud sentence will be…
Convicted 1 – 5 years: 1/3
Convicted 5 – 10 years: 7/4
Convicted 10 – 16 years: 10/1
Not Convicted: 5/1

The best comment is from BetCris’ spokesman, Esteban Siles, who told Gambling911, “I don’t understand why people refuse to pay their taxes. If it didn’t work for Al Capone or Tony Montana, then why would tax evasion work for anyone else?”

If you believe Robert Barnes, one of the attorneys for Wesley Snipes, the first week of Snipes’ trial went well. Mr. Barnes told the Ocala Star-Banner, “I think what they [jurors] saw was that Mr. Snipes openly, honestly engaged the IRS for years … and never received any meaningful response.” That’s one way of looking at the first week of the trial.

To this observer who is, though, looking at the trial from 3000 miles away, it doesn’t look like Mr. Snipes had a good week. First, Mr. Snipes went to trial in a locale which he has previously described as “racist,” Ocala, Florida. An attorney that Mr. Snipes supposedly dismissed showed up as one of his attorneys, too. Second, the prosecution has presented evidence showing that Mr. Snipes’ previous accountant, Kenneth Starr, told him that the idea that he didn’t have to pay income tax on his millions of dollars of income was laughable.

I don’t think things improved on Friday. According to Ocala.com, an ex-employee of Mr. Snipes’ film production company, Carmen Baker, had some collaborating evidence of Snipes’ behavior. Ms. Baker told the Court after hearing co-defendant Eddie Ray Kahn’s theory that Americans don’t have to pay taxes, “I was told by Mr. Snipes, Was I not paying attention? Did I not understand what I was just shown? I didn’t believe it. I thought it was bogus from the beginning.”

Ms. Baker made the wise decision (in my view) to consult another accountant. Mr. Snipes, though, had other ideas about the wisdom of that decision. Ms. Baker told the Court, “I got called into the office, and I was told that I was being a difficult employee and told that I should not have called an accountant. [Mr. Snipes] said, ‘If you’re not going to play along with the game plan, then you need to find employment elsewhere.'”

Mr. Snipes didn’t want her talking to the government even under subpoena. “He said if you do contact them you will have to pay the consequences,” Ms. Baker told the Court. Although Ms. Baker was under a non-disclosure/confidentiality agreement, a subpoena overrides such an agreement.

There was more evidence presented on Friday. Mr. Kahn’s company prepared ‘bills of exchange,’ and the government introduced several such bills sent to the IRS by Mr. Snipes. Though Mr. Snipes’ attorneys asked for a mistrial after several witnesses described such documents because this was evidence (in Mr. Snipes’ attorneys view) solely applicable against Mr. Snipes’ co-defendants, the mistrial was granted. Given that Mr. Snipes sent such documents to the IRS they appear to be yet another link in the chain.

At this point the only thing we know about the defense is that they plan on calling character witnesses such as Barbara Walters and Muhammad Ali. I think they’re going to need a lot more than that for Mr. Snipes to avoid spending significant time at ClubFed. The trial will resume on Tuesday in Ocala.

Remember Richard Hatch, the Survivor winner who decided not to report his $1 million in winnings? Mr. Hatch, who is now residing at ClubFed, went to his accountant and was told he had to pay taxes on his winnings. He asked his accountant what would happen if he didn’t include his $1 million prize, and was told he’d get a small refund. He asked his accountant to prepare that return; the accountant did, but stamped “Do Not File” on the return. Mr. Hatch filed the return and the rest is history.

Mr. Snipes appears to have engaged in similar behavior. He called his tax accountant, Kenneth Starr of Starr and Company, and told Mr. Starr that he didn’t have to pay taxes. “I said that was ridiculous; that everyone has that obligation. He said he had spoken to some people that said he didn’t have to,” Mr. Starr told the Ocala, Florida court yesterday.

Mr. Snipes had the not-so-perfect rejoinder, according to Mr. Starr. “He said, ‘You always think you’re right and you always think you know everything. You’re not right about this.'” Mr. Starr then sent a letter to Mr. Snipes terminating their accounting relationship.

Under cross-examination Mr. Starr was asked whether he had sent a written notice to Mr. Snipes that he had to pay taxes. The AP report notes, “Starr said he didn’t have to; he told Snipes on the phone and needed nothing further to terminate their tax arrangement.”

Joe Kristan has more at Roth Tax Updates.

Opening arguments were heard in Ocala, Florida in the trial of Wesley Snipes. Prosecutors called Snipes a tax evader, and that he didn’t pay $35 million in taxes from 1999-2004 according to this Fox News story. Prosecutor Robert O’Neill told the jury, “The defendants Snipes, Kahn and Rosile willfully agreed to defraud the United States of revenue it was due.”

But that’s not how the defense views it. Robert Bernhoft, one of Snipes’ attorneys, said that Snipes was willing to pay his back taxes once he heard from the IRS. Another of Snipes’ attorneys, Daniel Meachum, said that Snipes had been duped by bad financial advisers.

Ah yes, Mr. Meachum. He’s the attorney that Snipes axed for “poor representation” last year. As Joe Kristan noted, he reappeared on Tuesday:

“So who shows up at his lawyer’s table yesterday but Daniel Meachum? From the A.P. report:

“‘…Snipes now has two choices: keep Meachum off the case or waive his previous claims of ineffective counsel. Waiving the claim might prove to be a problem if Snipes were convicted, since that could provide fertile ground for a possible appeal.’

“…It makes it look as though the prior ‘firing’ may have been just a cynical delaying tactic.”

I guess the defense chose waiving the claim, as Mr. Meachum was present today. In any case, tomorrow brings the first evidence and testimony in the case. Who knows, maybe Mr. Meachum will be asked to disappear again?

Day 1 of the Wesley Snipes trial has come and gone in Ocala, Florida. Jury selection began but did not conclude today.

The day began for Mr. Snipes in a prayer service. At an Ocala church Mr. Snipes was joined by 22 pastors and 150 friends before the trial began at 9:30 a.m. local time. Mr. Snipes is accused of making a false income tax return and not filing his tax returns for several years.

Then jury selection began. Judge William Terrell Hodges first read off a list of prosecution witnesses: accountants, investigators, and the like. Jurors are always asked if they know a witness (the goal is an unbiased jury). Then the attorneys for Mr. Snipes read off their witness list. Tax experts, they weren’t: movie director Spike Lee, actor Woody Harrelson, actress Goldie Hawn, newscasters Tom Brokaw, Barbara Walters, and Diane Sawyer, and former boxer Muhammad Ali.

Though jury selection was supposed to finish on Monday it hadn’t when court adjourned for the day. Jury selection will likely conclude on Tuesday; opening arguments will also likely be heard then.

Finally, thesmokinggun has a contribution today. They present a convenient chart showing his income and at what level you have to pay taxes. The second through fourth pages show some sort of legal document Mr. Snipes filed in Orange County, Florida (Orlando). I can’t figure it out, and neither could thesmokinggun.

The defense estimates that the trial will last about a month. It should be interesting….

News Stories: AP, Orlando Sentinel

Wesley Snipes goes on trial today, facing charges of tax evasion, failing to file tax returns, and filing a false claim for an income tax refund. The TaxProf Blog has a post with links to the various media coverage of the trial; Joe Kristan also has a report on Snipes’ use of the 861 defense (and its likely failure).

As there are developments I’ll continue to post on United States v. Snipes.

Yesterday the 11th Circuit Court of Appeals dealt the final blow to Wesley Snipes’ wish of a trial in the Big Apple (or anywhere but Ocala, Florida). They dismissed Snipes’ motion to move the trial from Ocala and denied his motion to stay the start of the trial.

So Snipes’ trial will definitely begin Monday in Ocala. It promises to inject some humor into the tax season for us bloggers but likely little humor for Snipes.

Poor Wesley Snipes. He’ll have to spend several weeks in beautiful bucolic Ocala, Florida. Judge William Terrell Hodges denied Snipes’ motions for a stay in the trial pending the ruling of the 11th Circuit Court of Appeals on Snipes’ appeals of Hodges’ earlier rulings. Given that the 11th Circuit hasn’t issued an emergency stay of Snipes’ trial (which they could have) it’s all systems are go and Snipes’ trial will almost certainly begin on Monday in Ocala.

So for Mr. Snipes’ benefit, here are some of the attractions he has to look forward to while being on trial in Ocala:

– Ocala is the “Horse Capital of the World” according to their chamber of commerce. Visit a horse farm or the Ocala Carriage Museum.

– Go and see Always … Patsy Cline at the Ocala Civic Theater (opens January 31st).

– Visit the Ocala National Forest.

– Play a round of golf at any of the 22 nearby golf courses and country clubs.

In any case, Wesley Snipes may wish to enjoy these diversions now as he may be spending a significant amount of time at ClubFed (where there just aren’t that many diversions) in the near future.