In 2009, rapper Method Man, whose real name is Clifford Smith, was arrested on felony tax evasion charges, accused of not filing tax returns for 2004 through 2007. His defense was pretty self-incriminating.
"Myself, I'm a pothead", he told reporters. "It's no secret. Everyone knows that. I go on the road and forget everything else. Sure, [the tax department] sent letters to my house saying, 'We need this money.' They started sending them in 2002."
Because of the tax debt and the ignored warnings, the Internal Revenue Service confiscated his 2008 Lincoln Navigator for felony charges of failing to file tax returns and misdemeanor charges of failing to pay taxes. The original tax bill without interest and penalties was $32,799. As of late June 2010, it was $106,000. Smith was sentenced to conditional discharge, meaning that the arrest will be purged from his record if he keeps his nose clean. Otherwise, he could be looking at up to four years in prison. On June 28th, he appeared in court, pleaded guilty to tax evasion, and wrote a check for the remaining balance he owed, which was $40,000.
"When he found out about the tax issue, he hired someone and immediately corrected it", defense attorney Peter Frankel told reporters. "He took care of it quickly like the good member of our community he is. He's not your typical rapper. He's not a troublemaker."
District Attorney Daniel Donovan told reporters",In these days of massive budget shortfalls and service cuts, tax evasion is a crime against all New Yorkers. Whether you are a celebrity or an average Joe you will be investigated, arrested, and prosecuted."
Remember Richard Hatch? Just about the time he fades out of the public eye, he somehow returns. He was the winner of Survivor in 2000. When he failed to report or pay taxes on the $1 million prize he won on national television - and other income that resulted from the win - he made headlines as the IRS pursued him. After being convicted in 2006, Hatch spent 51 months in jail. Toward the end of that sentence he was permitted to finish his confinement on house arrest at the home of his sister in Newport, Rhode Island. Then...he ended up back behind bars.
In 2009 he appeared on the Today Show to give what authorities call an "unauthorized media interview." The appearance with Matt Lauer included inflammatory statements against the government, suggesting that he was pursued not for tax evasion, but for being a homosexual. A few hours after returning to house arrest, the police knocked on the door of his sister's home and took him to a Massachusetts jail where he remained for 30 days. Hatch got the American Civil Liberties Union to intervene on his behalf to have his house arrest restored. Judge Nathaniel Gorton denied the request.
Gorton also denied Hatch's 2009 request that he be allowed to go free a bit early so that he could participate in Survivor's 20th season in Samoa. Hatch's argument included a claim that, if he won in Samoa, he'd be able to pay his tax debt. Unfortunately for Hatch, Judge Gorton wasn't taking the bait and denied the request.
These days, Hatch is free, but he still owes the taxes that he went to prison for. Now he owes the IRS a whopping $1,742,711 on income from 2000 and 2001, according to a lien filed with the Newport Rhode Island City Clerk. Hard to say how he will survive this one.
Like Hatch, Wesley Snipes is no stranger to negative headlines. In July 2008 he went to court where he was acquitted of the worst charges against him - tax evasion. But on the lesser charges of failing to file returns and pay taxes, he was sentenced to 36 months in prison and ordered to pay a $5 million fine. Judge William Terrell Hodges then let Snipes go free on bail, pending his appeal, in order to complete work that had begun on movies in London and Bangkok. The judge did, however, limit Snipes's travel to those two locations.
With the recent arrest of Kenneth Starr - financial advisor to celebrities, including Snipes - Snipes and his attorneys are hoping to turn Starr's legal woes into a blessing for the actor. Starr was arrested on charges of securities fraud amounting to $59 million. During Snipes' trial, Starr was a key witness in the case against him when he told the court that he advised Snipes to file tax returns for the years in question, but Snipes ignored him.
Now Snipes's attorneys are hoping to use Starr's arrest to prove he was not a credible witness, and that state prosecutors knew that Starr was under investigation when they tapped him to testify against Snipes. They are asking the court to dismiss Snipes' conviction or to open a new trial.