Taxable Talk

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?