I think I'm in love with Wesley Snipes

[seanx]

January 14, 2008
Wesley Snipes to Go on Trial in Tax Case
By DAVID CAY JOHNSTON

From 1999 to 2004, the actor Wesley Snipes earned $38 million appearing in more than half a dozen movies, including two sequels to his popular vampire thriller “Blade.”

The taxes he paid in the same period? Zero.

But unlike other celebrities who find themselves on the wrong side of the Internal Revenue Service, Mr. Snipes has a flamboyant explanation: he argues that he is not actually required to pay taxes.

Mr. Snipes, who is scheduled to go on trial Monday in Ocala, Fla., has become an unlikely public face for the antitax movement, whose members maintain that Americans are not obligated to pay income taxes and that the government extracts taxes from its citizens illegally.

His trial has become the most prominent income tax prosecution since the 1989 conviction of the billionaire New York hotelier, Leona Helmsley, who went to prison for improperly billing personal expenses to her business.

Tax deniers maintain that the law only appears to require payment of taxes. All their theories have been rejected by the courts, including the one invoked by Mr. Snipes, which is known as the 861 position, after a section of the federal tax code.

Adherents say a regulation applying the 861 provision does not list wages as taxable, though it does say that “compensation for services” is taxable. The courts have uniformly rejected all such theories, and eight people have been sentenced to prison after not paying taxes based on the 861 argument.

Despite the court rulings, juries have acquitted some prominent tax resisters in recent years, and failed prosecutions have encouraged others to join. Even when the government has failed to obtain convictions, it succeeded in collecting the taxes through civil enforcement.

J. J. MacNab, a Maryland insurance analyst who tracks people who deny they owe taxes and has testified before Congress about the movement, said that an acquittal of Mr. Snipes would be a severe setback for the I.R.S.

“He will get more press and attention than any other victory by the tax deniers, and the growth in new members will be exponential,” she said.

Mr. Snipes, 45, is charged with two felonies: conspiracy to defraud the government and filing a false claim for a $7 million refund (a claim for the year 1997, before he stopped paying taxes). He is also charged with failing to file tax returns for the six years starting in 1999. Prosecutors say they intend to show that Mr. Snipes moved tens of millions of untaxed dollars offshore and gave the government three worthless checks totaling $14 million to cover some taxes.

In court papers and interviews, Mr. Snipes says that he is not guilty and that he acted on the advice of two tax professionals. They are being tried alongside him and are promoters of the 861 position and other tax theories.

One is Douglas Rosile, who was stripped of his accounting license in 1997. The other is Eddie Kahn, who has served prison time for tax crimes. Both are under federal court order to stop promoting tax evasion, including the 861 position.

The lawyer representing Mr. Snipes at trial is Robert Bernhoft of Milwaukee, who has been barred by court order since 1999 from selling a program under which he said people could legally stop paying income taxes.

Mr. Snipes, who grew up in the Bronx, is best known for tough-guy roles in movies like “Blade,” “U.S. Marshals,” and “The Passenger,” but he also starred in films by Spike Lee (“Jungle Fever,” “Mo’ Better Blues”) and Ron Shelton (“White Men Can’t Jump”).

His involvement with the tax resistance movement may stem from his association with the Nuwaubians, a quasi-religious sect of black Americans who promote antigovernment theories and who set up a headquarters in Georgia in the early 1990s.

In 2000, Mr. Snipes sought a federal permit for a military training compound on land next to the Nuwaubian camp; the Bureau of Alcohol, Tobacco and Firearms rejected the request.

“Snipes is already drawing whole new demographics to the movement,” Ms. MacNab added. “Tax protesters used to be white, 50 or older, blue-collar, rural and often connected to racist movements, but Snipes is young, urban and famous.”

She and others said the movement got a boost in 2005 when a jury acquitted Joseph Banister, a former criminal investigator for the I.R.S., who used his acquittal as proof that his views on the tax law were correct. One problem with that case was that even though his co-defendant, Al Thompson of Lake Shasta, Calif., was acquitted of conspiracy in a separate trial, Mr. Thompson is serving six years in prison for failing to withhold taxes from his employees and turn the money over.

Federal prosecutors also failed to convict a Louisiana lawyer, Tom Cryer, who, like Mr. Snipes, said he sincerely believed that he was not required to pay taxes. Another resister, Robert Lawrence of Peoria, Ill., had his case dropped in 2006 after arguing that tax forms violate the federal Paperwork Reduction Act — a strategy that had been falling out of favor among tax opponents but has since gained new adherents. Both men were still liable for the taxes after their cases.

Prosecutors also failed to convict a FedEx pilot, Vernice Kuglin of Memphis, who said she wrote the I.R.S. asking what law makes her liable for taxes, but got no response. She later signed papers conceding she owed more than $600,000 in taxes, and last week her goods, including her 14-year-old vehicle, were auctioned in Memphis. Ms. Kuglin said that despite the court filing, she continues to believe that she does not owe taxes.

Tax specialists and lawyers say that the Snipes case hinges on whether he can persuade jurors that he sincerely believed that he did not have to pay taxes, while prosecutors will argue that he was just trying to avoid them. The Supreme Court has ruled that people can make such an argument, but two leading defense lawyers said that Mr. Snipes might have a hard time using it as a defense.

Michael Louis Minns, a Houston lawyer who has defended and won acquittals for tax protesters, said that the three bad checks that Mr. Snipes sent the government to cover $14 million of taxes would seem to destroy a defense based on that argument.

“You can win acquittal with a good-faith defense that you sincerely believed you do not have to pay taxes,” Mr. Minns said. “But not if you make inconsistent claims.”

William Cohan, a lawyer in Rancho Santa Fe, Calif., who also represents tax opponents, said another hurdle is the refund claim form signed by Mr. Snipes. The signature statement, or jurat, was altered so that instead of saying it was signed under penalty of perjury, the word “no” was inserted before “penalty.”

“That’s just devastating because if you sincerely believe you are not required to pay taxes, why would you alter the jurat?” Mr. Cohan said.

[JeffD5Buddy]

I got a free subscription to Entertainment Weekly magazine and they did an article about this and did a one on ojne interview with Snipes. This didn't seem to be the defense he wanted to use.... to abbreviate, he basically said it was all a mistake and the government wouldn't respond to his request to fix the situation.... adding the property he wanted to buy near the camp on Georgia was just a misunderstanding and he has no idea who they are. It'll be interesting to see which way his defense goes if the above is true. I'll see if I can find a link to the article I read online.

[JeffD5Buddy]

Here it is.... see what you think....

www.ew.com/ew/article/0,,20165873,00.html

[seanx]

update:

Wesley Snipes Cleared of Serious Tax Charges

David Cay Johnston
The New York Times
February 2, 2008

A federal jury returned a mixed verdict against the actor Wesley Snipes on Friday, acquitting him of the most serious tax charges he faced, but convicting him on three of six lesser charges. The case was the most prominent tax prosecution since the billionaire hotelier Leona Helmsley was convicted of tax fraud in 1989.

Mr. Snipes, who has built a worldwide following acting in films like the “Blade” vampire trilogy, must pay up to $17 million in back taxes plus penalties and interest.

He had become an unlikely public face for the tax denier movement, whose members maintain that Americans are not obligated to pay income taxes and that the government extracts taxes from its citizens illegally.

The jury found Mr. Snipes not guilty on two felony charges of fraud and conspiracy. He was also acquitted on three misdemeanor charges of failing to file tax returns or to pay taxes from 2002 to 2004. But the jury found him guilty of failing to file returns or pay taxes from 1999 through 2001. He faces up to three years in prison. If convicted of the felonies, he would have faced up to 16 years.

JJ MacNab, a Maryland insurance analyst who attended the trial and is writing a book about tax deniers, said “the verdict shows that promoters face serious jail time” but clients who follow their advice will face a lesser but still serious risk of imprisonment.

Mr. Snipes’s two co-defendants — Eddie Ray Kahn, a promoter of tax denial, and Douglas Rosile, a former accountant — were convicted on the fraud and conspiracy charges.

It was the fourth major case in which the Justice Department failed to win convictions in cases against prominent tax deniers. The verdict drew whoops of joy outside the federal courthouse here from fellow tax deniers who immediately proclaimed it another victory that would draw more people to their cause.

The courts have declared the tax denier arguments are frivolous. Even Mr. Snipes’s defense lawyers, who called the denier claims “dead wrong” in their closing arguments to the jury, reiterated that statement after the verdict.

Mr. Snipes will pay all of his income taxes plus penalties and interest, said Robert E. Barnes and Robert G. Bernhoft, who defended him.

“He will make full amends and pay everything,” Mr. Barnes said.

Mr. Bernhoft said Congress should repeal criminal tax laws and treat tax evasion as a civil matter.

Robert E. O’Neill, the United States attorney here, said current law “is entirely subjective” on criminal intent because juries must decide whether a defendant “sincerely believes” he was not required to pay taxes.

The Justice Department has told Congress there is no need to revise the tax laws on intent. But when Mr. O’Neill was asked whether the laws should be changed, he said, “Absolutely.”

The defense, prosecution and Ms. MacNab all said the verdict showed that the jury recognized the promoters as criminals and saw Mr. Snipes as their victim. They also agreed that the reason the jury acquitted Mr. Snipes of not filing his tax returns in 2002 through 2004 was because he had been told he was the target of a criminal investigation and jurors believed that he was exercising his right to remain silent. The jury convicted him of failing to file his tax returns before he knew was a suspect.

Even as Congress has reduced income tax rates, the tax denier movement has spread, fueled by high payroll taxes, political attacks on the Internal Revenue Service and anger among people who have not benefited from strong overall economic growth.

Instead of prosecuting all offenders, the Justice Department brings cases against well-known individuals, hoping that widespread news coverage will encourage compliance, a policy known as general deterrence. The Snipes prosecution, like the three earlier cases that resulted in full acquittals, appears to have backfired.

The Justice Department has for months declined requests to provide an official who would discuss its tax prosecution policies on the record.

Tax deniers assert variously that the tax laws are valid but do not apply to them, that no law makes anyone liable for taxes and that the government tricks people into paying. Promoters of tax denial claim that people can legally stop paying income taxes by executing certain documents, or by not signing others, like tax returns. Courts have rejected all these arguments.

Mr. Snipes, 45, was indicted in October 2006 for filing a false claim for a $7 million refund (of taxes paid in 1997, before he stoped paying taxes), and conspiracy with his two co-defendants to defraud the government through that claim, which was not paid.

Since 1986, Mr. Snipes has appeared in more than 50 films, earning at least $103 million, court papers showed, including more than $58 million in the years covered by the indictment, 1999 through 2004.

Mr. Snipes has built a huge following, especially overseas, with his portrayals of intrepid detectives and fearless vampire slayers and his occasional comedic roles. In addition to the “Blade” series, he starred in movies like the action film “Drop Zone,” the political intrigue “The Art of War,” and, with Sean Connery, the corporate crime thriller “Rising Sun.”

The defense rested on Monday without calling any witnesses. Mr. Snipes declined to answer questions outside the courthouse on Friday, where a gaggle of reporters was surrounded by dozens of fans from this central Florida city.

In closing arguments on Tuesday, lawyers for Mr. Snipes sought to portray him as a well-intended victim of bad advice by his co-defendants. They called his tax theories “kooky” and “crazy,” but said acting on these views did not make him a criminal because he disclosed his actions.

The Supreme Court has ruled that tax deniers can demonstrate the absence of criminal intent by asserting that they “sincerely believe” that they are not required to pay taxes, although they cannot escape the levies.

Prosecutors argued that Mr. Snipes showed criminal intent when he sent the government three bogus checks to pay $14 million in taxes and an amended tax return that was subtly altered with software to insert the word “no” before “penalty of perjury.”

Defense lawyers said Mr. Snipes did not file tax returns after his indictment because the I.R.S., by making him the target of a criminal investigation, “forced” him to exercise his right to remain silent.

After his indictment, however, Mr. Snipes sent the government a series of rambling letters describing his tax theories and warning that “pursuit of such a high-profile target will open the door to your increased collateral risk.”

Mr. O’Neill, the lead prosecutor, called the filings “gibberish” whose purpose was to thwart law enforcement.

In one 600-page document, Mr. Snipes said he was legally a “nontaxpayer” and the tax laws did not apply to him because he was not a resident of the District of Columbia, was not a federal official and was not engaged in any trade or business, all common tax denier arguments.

Mr. Snipes also complained that the I.R.S. violated his 14th Amendment rights to equal protection because it would not help him establish what he said was his rightful status as a legal nontaxpayer.

Mr. Snipes joined the tax denier movement after becoming upset when told that his 1999 income tax would be more than $2 million, Carmen Baker, his former assistant, testified.

A mutual acquaintance introduced Mr. Snipes to one of his co-defendants, Mr. Kahn. Mr. Kahn operated a Christian ministry, the Guiding Light of God Ministries, and a central Florida company called the American Rights Litigators that helped tax deniers avoid paying.

Mr. Kahn, who was imprisoned for tax crimes in 1985 to 1987, fled to Panama after the 2006 indictment. He was extradited to stand trial on the latest charges but refused to attend the proceedings, remaining in his jail cell, after telling Judge William T. Hodges that the court had no authority over him.

Mr. Snipes and Mr. Rosile are free on bail.