Nicolas Cage sues business manager for tax woes
The trouble seems to never end for Nicolas Cage. Now the IRS is after him for $6.26 million in taxes owed on his 2007 income. Plus there's a second lien for more than $360,000 from income earned between 2002 and 2004. In 2008 Cage and his attorneys went several rounds with the IRS over a $1.8 million tax shortfall. After a strong defense, the bill was reduced to $660,000 and Cage and his legal team called it a victory. Unfortunately, that victory was short-lived. The close scrutiny given to his financial affairs unearthed bigger problems. As a result, last July, the IRS filed a new lien against Cage in the Orleans District Court in Louisiana, to the tune of $6,257,005.
As if all that was not enough, Cage is also the target of a breach of contract complaint filed by East West Bank, which claims that Cage has not paid back a $2 million loan.
In last year's "victorious" fight, one of Cage's key supporters was his business manager, Samuel J. Levin. But this year, on October 16, Cage filed a $20 million lawsuit against Levin. The suit alleges that Levin "lined his (own) pockets with several million dollars in business management fees while sending Cage down a path toward financial ruin." According to the actor's representative, he "relied on Levin to handle his financial affairs to ensure that he and his family would have a financially secure future built on the foundation of the substantial monies Cage earned through years of hard work."
That "path toward financial ruin," says Cage, included the purchase of several risky real estate investments. The lawsuit against Levin says that Cage "... is now forced to sell major assets and investments at a significant loss and is faced with huge tax liabilities because of Levin's incompetence, misrepresentations, and recklessness."
Whether or not Levin was a bad business manager, Cage did seem to have a bit of a spending problem. The Daily Beast reports that among other expensive things, the actor owns two yachts, a jet, two Bahamian islands, and a Lamborghini that cost him half a million dollars.
So is Cage broke? The last time Forbes estimated his net worth, it was around $38 million. And in 2008/2009, he earned another $40 million. Even so, he does seem to be feeling a pinch.
The New Orleans Times-Picayune says Cage's vintage homes in the French Quarter and Garden District will be sold to the highest bidder. People Magazine says his castle in Germany was recently sold to one of his advisers. And currently on the market are his homes in Bel Air, Las Vegas, and Rhode Island.
Is blaming the advisors becoming a Hollywood trend?
Cage is just one of recent celebrities to point the finger of blame at financial advisors. Wesley Snipes says his accountant, Douglas Rosile, and another advisor -- tax protestor Eddie Ray Kahn -- convinced him he didn't owe any taxes. Eventually, all three were convicted.
Then there is Joe Francis, producer of the Girls Gone Wild videos. From the beginning he said his tax troubles were the fault of his accountant, Michael Barrett. Francis recently plead guilty to some of the tax-related charges against him and got a fairly mild sentence. When the dust settled, it appears Francis may have been right. Just as Barrett was poised to be a key witness for the prosecution against Francis, evidence surfaced that suggests he and two other employees of Mantra Films (owned by Francis) diverted millions of dollars out of the company for their own use.
Just days ago, country music legend, Merle Haggard filed suit against former business manager, Robert Brown. Haggard says Brown (of CPB Business Management) underestimated the tax he and his wife would owe, resulting in nearly $640,000 in penalties and fees. According to the complaint, Brown failed to file any tax returns for the Haggards from 2004-2007.
With all the Hollywood finger pointing going on, you have to wonder, which came first, the chicken or the egg? Do advisors grow reckless when dealing with fabulously wealthy celebrities? Or are rich celebrities seeking out advisors who are aggressive enough willing to play fast and loose with tax law?