IRS sticks former Duke lacrosse player and falsely accused rapist with $6.5M tax bill
by AccountingWEB on
The name Reade Seligmann has been out of the headlines for awhile, but lately he's been back in the limelight. He was one of three Duke University lacrosse players who were accused – and eventually exonerated – in a racially charged rape case. Seligmann is now a law student at Emory University in Atlanta. And… according to public records, he now owes nearly $$6.5 million in federal taxes.
The lien  was filed in New York City on February 17, in the amount of $6,492,377 and relates to income from 2007. That was the year Seligmann, now age 24, reached a settlement with Duke University. Though the amount of the settlement was never disclosed, the federal lien raises speculation that the tax liability is based on a settlement approaching $20 million. This is according to tax attorney Jeffrey Freeman of Birmingham, Alabama, a specialist in civil and criminal tax cases. Freeman told reporters at the Detroit News that this is the income that would be necessary to generate a tax bill of $6.5 million.
Freeman also said that settlements arising from personal injury cases are generally not taxable to the recipient. On the other hand, settlements stemming from emotional distress, depression, and certain other symptoms are taxable income.
Seligmann's attorney, Richard Emery, told reporters that the settlement was not the basis of the tax lien, and he added, the tax lien is inaccurate.
"We are trying to get to the bottom of this mistake. We are retaining tax counsel to figure this out. The lien will be withdrawn shortly. It is in error."
In another interview, Emery told the New York Daily News that the lien "… is quite obviously a mistake. We will get it corrected. The whole thing is very weird and makes no sense." Emery acknowledged that the Internal Revenue Service clearly believes his client owes the tax debt, and they are working to clear up what he later referred to as a "monstrous and terribly destructive mistake."
Also named on the tax lien is David Weiss, Seligmann's Manhattan accountant. Weiss provided consultation to Seligmann's family at the time of the settlement. The lien establishes a legal claim to all of Seligmann's property and income.
"It's just a flat-out mistake," said Emery, refusing to comment further. Emery is currently representing Seligmann in a federal lawsuit which is pending against the city of Durham, North Carolina.
In the spring of 2006, Seligmann was suspended by Duke University after a woman accused him of attacking her at a party. Crystal Magnum, a black exotic dancer, was hired to work as a stripper at the March 2006 event thrown by the Duke Blue Devils lacrosse team. Later, after Seligmann was indicted on charges of kidnapping, rape, and sexual offense, the school suspended him. Duke also fired the team's coach and canceled the remainder of the lacrosse season.
A media storm surrounded the case, escalating to charges that the three accused men had racist motivations for the alleged attack. Reporters from the Dailymail.co.uk said that charges were flying around that the lacrosse players had asked only for white or Hispanic strippers and became angry when two black dancers showed up.
The controversy over the case escalated when the Durham County prosecutor Mike Nifong resigned. Nifong was accused of trying to sway the case by making misleading and inflammatory statements, lying to the court, and withholding DNA evidence. Nifong was later disbarred.
After Nifong's departure, state prosecutors took over the case, and eventually all three men were cleared of the charges. The Dailymail reported that state prosecutors accused Nifong of orchestrating a "rush to accuse" the players.
A year later, in June of 2007, Seligmann and his two teammates reached a settlement with Duke. At that time the university issued a statement  that the case was settled in order to "eliminate the possibility of future litigation."
When the news of the tax lien became public, Emery summarized this development by telling Daily News reporters, "The tragedy of this is that Reade is twice victimized by false allegations."