Stakes high for Wesley Snipes in tax fraud, conspiracy trial

January 13, 2008 (Miami Herald / Travis Reed) -- Eight years ago, Wesley Snipes was hot. He made millions as a half-man, half-vampire in the first "Blade" movie, and had just gotten a star on the Hollywood Walk of Fame. Snipes was also paying millions in federal income taxes, until prosecutors say he met two Florida men and accepted their argument that he didn't have to.

Based on a long-rejected interpretation of the tax code, Snipes allegedly tried to collect millions in illegal refunds, and has not filed a federal return since 1998.

The 45-year-old action star is set to go on trial January 14 on tax fraud and conspiracy charges. He faces up to 16 years in federal penitentiary if convicted, while co-defendants Eddie Ray Kahn and Douglas P. Rosile face 10.

Snipes' attorneys say he was the victim of unscrupulous advice, and didn't know he was doing anything illegal. He is free on $1 million bond.

"He was completely innocent and he acted in good faith - not with any bad purpose or criminal intent to deceive or defraud the (Internal Revenue Service) at all," defense attorney Robert Barnes said.

Prosecutors say the evidence proves otherwise.

Kahn founded a group in the 1990s, American Rights Litigators, and a successor group, Guiding Light of God Ministries, that purported to help members legally avoid paying taxes. Rosile, a former certified public accountant who had lost his licenses in Ohio and Florida, prepared the paperwork. Snipes joined their group in 2000.

Kahn's and Rosile's system relied on what's known as the "861 argument" - a fringe interpretation of the federal tax code that holds that U.S. citizens don't have to pay taxes on wages they earn within this country. It has been continually rejected as frivolous by judges and the IRS, but is still used by some tax protesters.

"In reality," the indictment said, "(Kahn's entities) were for-profit, commercial enterprises that promoted and sold fraudulent tax schemes that interfered with the administration of the internal revenue laws of the United States."

ARL charged annual dues for members like Snipes and took 20 percent of any return generated, the indictment said.

Snipes invited Kahn to his California home for a presentation in 2000, and continued to work with Kahn even after his previous tax advisers told him Kahn's position was inaccurate, the indictment said.

Snipes also ordered his film companies to stop deducting taxes from employees' paychecks, prosecutors said.

Not only did Snipes stop filing, he also started filing false forms on taxes rightly paid in the previous two years, the indictment said. In April 2000, Snipes sent a fraudulent claim for $4 million he paid in 1996, prosecutors said.

In October 2000, Snipes signed an "Affidavit of Incompetence" stating that he didn't understand the tax laws or know if they applied to him.

The next April he allegedly filed for more refunds - $7.4 million from 1997 wages- while failing to file for the previous year.

The government never returned any of the money, but Snipes kept working with Kahn. He paid membership dues at least until March 2003, the indictment said.

Part of Kahn's scheme, prosecutors allege, was to keep the IRS backed up with bizarre demands and heavy paperwork. It relied on a "determination letter," which ARL allegedly advised Snipes to send to check his tax status. If the IRS did not respond, Kahn allegedly told Snipes, he did not have to pay any taxes.

Snipes twice sent letters to IRS special agents investigating the case, in 2003 and early 2004, saying the agent had no authority to probe his tax situation.

The actor has moved on to a second legal team, having fired two lawyers who also represented Michael Vick in Vick's highly publicized dogfighting case. Both they and current counsel offered a flurry of motions, most of them denied.

The most noteworthy was a change-of-venue request, arguing that this central Florida town is racist and he couldn't get a fair trial. Snipes wanted the trial moved to New York, where he has a home, but the judge said there was no compelling reason or proof of racism.

Further complicating Snipes' case is his co-defendants. The three, tied by the conspiracy charge, are being tried together despite Snipes' protests.

Kahn, who remains jailed, has no legal training, but insists on representing himself and has made several missteps and peculiar motions. For example, he sought to be immediately freed because the indictment lists his name in all capital letters, and said Florida was never ceded to the federal government, so U.S. attorneys have no jurisdiction.

Those motions were denied, as was Snipes' request to separate the two in trial.







Snipes gets the max -- 3 years -- in tax case

April 25, 2008 (CNN) -- Actor Wesley Snipes was sentenced Thursday to three years in prison for three misdemeanor counts of failing to file tax returns -- the maximum requested by federal prosecutors.

"Snipes' long prison sentence should send a loud and crystal clear message to all tax defiers that if they engage in similar tax defier conduct, they face joining him," said Assistant Attorney General Nathan J. Hochman of the Justice Department's Tax Division.

Internal Revenue Service Commissioner Douglas Shulman said the law is clear on taxes.

"There is no secret formula that eliminates a person's tax obligations, nor are there any special exceptions," he said.

"The majority of Americans pay their taxes timely and accurately. Those who willfully violate the law must be held accountable."

In a civil suit, the IRS is seeking repayment of all taxes and interest from Snipes.

Federal prosecutors said the actor for nearly a decade escaped paying more than $15 million in income tax returns by sending money to overseas accounts, though they acknowledged in court that the amount is in dispute.

Before the sentencing, the actor asked the court to show mercy and offered three checks totaling $5 million as a gesture of good will.

Federal prosecutors diverted the checks to the U.S. Treasury -- which accepted the payment -- but it wasn't enough.

"It's essentially a down payment, but a fraction of what he owes," said Assistant U.S. Attorney Scotland Morris.

Snipes' attorneys -- who had argued he should get probation or house arrest -- said they will appeal the sentence.

The actor, who showed little reaction, gave a loud "wow" to the crowd as he exited the courtroom.

A jury convicted Snipes on the misdemeanor charges February 1, but he was acquitted of more serious felony charges of tax fraud and conspiracy. Jurors accepted his argument that he was innocently duped by errant tax advisers.

Defense attorneys in court documents suggested that to sentence Snipes harshly would be to disregard the jury's verdict.

But prosecutors, in their sentencing recommendation, said the jurors' decision "has been portrayed in the mainstream media as a 'victory' for Snipes. The troubling implication of such coverage for the millions of average citizens who are aware of this case is that the rich and famous Wesley Snipes has 'gotten away with it.' In the end the criminal conduct of Snipes must not be seen in such a light."

Snipes, who has starred in dozens of movies, including the "Blade" trilogy, "Major League" and "Murder at 1600" had received the support of many of Hollywood friends. Defense attorneys filed 39 pages of testimonials, letters from a Hollywood "Who's Who" list and also high school friends and his employees.

Actors Denzel Washington and Woody Harrelson, as well as television judges Joe Brown and Greg Mathis, submitted letters to the judge on Snipes' behalf.

In his letter, Washington said Snipes was "like a tree -- a mighty oak ... Many who know him have witnessed the fruit of his labors, have sat in his shade and even been protected by his presence. I am proud of him, proud to call him a fellow thespian and most importantly, proud to call him a friend."

Brown, who addressed the court on Thursday, likened Snipes to legendary actors, including Sidney Poitier, and said, "I have been something of a mentor to the young man."

Another witness described how Snipes had helped train personnel from 33 airlines on safety techniques after the September 11, 2001, terror attacks, without seeking pay or media attention.

"This man is one of the most honorable men of character," said Robert Wall, CEO and president of World Black Belt, a martial arts training firm. "He's made mistakes, but I'm so impressed with the depth of his character."


Snipes to be sentenced on tax evasion charges

April 24, 2008 (CNN) -- Actor Wesley Snipes faces up to three years in prison and a fine of $5 million when he is sentenced Thursday on federal tax evasion charges.

Wesley Snipes was acquitted of the most serious charges against him.

Federal prosecutors last week urged U.S. District Judge William Hodges in Ocala, Florida, to sentence Snipes to the maximum penalty to demonstrate to taxpayers that refusal to pay income taxes carries severe penalties.

Snipes was convicted on three misdemeanor counts of failure to file federal income tax returns.

"This case presents the court with a singular opportunity to deter tax fraud nationwide," the government said in its sentencing recommendation. Video Watch more on Snipes' defense »

Snipes, who has starred in movies such as "Blade," "Major League" and "Murder at 1600," had been charged with felony conspiracy counts for participating in a scheme that rejects the legal foundation of the tax system. However, a jury accepted his argument that he was innocently duped by errant tax advisers and acquitted him on the most serious charges.

"The fact that Snipes was acquitted on two felony charges and convicted 'only' on three misdemeanor counts has been portrayed in the mainstream media as a 'victory' for Snipes," the government document says.

"The troubling implication of such coverage for the millions of average citizens who are aware of this case is that the rich and famous Wesley Snipes has 'gotten away with it.' In the end the criminal conduct of Snipes must not be seen in such a light."

Assistant Attorney General Nathan Hochman, head of the Justice Department's Tax Division, last week promised to beef up the government's efforts to pursue those engaged in a variety of schemes making legal assertions that income taxes are either voluntary or unconstitutional.

"For nearly a decade Snipes has engaged in a campaign of criminal tax conduct combining brazen defiance with insidious concealment," the prosecutors say. "By these means Snipes has escaped paying more than $15 million in income tax to the IRS and has pursued an intended fraudulent harm to the United States Treasury of more than $41 million."

The document says Snipes shipped millions of dollars to accounts in Switzerland, Antigua and the Isle of Man to avoid taxes.

"Given defendant's income, earning capacity, and financial resources, both disclosed and undisclosed, the United States submits that a fine of at least $5 million is warranted," the sentencing recommendation says.

The 35-page argument for the stiffest possible penalty ends with a dramatic flair.

"In the defendant Wesley Snipes, the court is presented with a wealthy, famous and inveterate tax scofflaw. If ever a tax offender was deserving of being held accountable to the maximum extent for his criminal wrongdoing, Snipes is that defendant," it says.

The IRS is also seeking repayment of all taxes and interest through civil court proceedings.


Snipes acquitted of tax fraud, conspiracy

February 1, 2007 (CNN) -- Actor Wesley Snipes was found guilty Friday on three misdemeanor charges of failing to file tax returns -- but jurors cleared him of more serious felony charges of tax fraud and conspiracy.

A smiling Wesley Snipes leaves the courthouse after the verdicts were returned Friday.

Snipes could have faced up to five years in prison on both the conspiracy and fraud charges. He was found guilty of only half -- three out of six -- of the failure to file charges. He faces a maximum one-year sentence on each but can be expected to be sentenced to less.

"Our position has been all along that Mr. Snipes committed no fraud," said Robert Bernhoft, Snipes' attorney, after the verdict was read Friday afternoon. "He had no bad intent, and that's what the jury accepted."

Snipes, dressed in a black suit, smiled and thanked well-wishers outside the courthouse -- walking with his hands held in a prayer position. He did not make a statement or take questions from the media. Video Watch the media crush after the verdict »

Almost immediately, agents of the Internal Revenue Service made it clear that they still intend to pursue taxes Snipes owes on roughly $38 million in income.

"Ultimately, if he really wants to take this all the way, he can go to tax court," said Victor Lessoff, a special agent with the IRS. "But we will pursue, civilly, the taxes. That's very important to us."

Bernhoft suggested Snipes will try to take care of the payments.

"Mr. Snipes has always been committed to doing the right thing and after this trial is over, he'll make whatever amends are required," he said.
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Snipes, who starred in such movies as "New Jack City," "White Men Can't Jump" and the "Blade" series of action films, had pleaded not guilty to charges that he failed to pay his federal income taxes from 1999 through 2004.

In October 2006, Justice Department and IRS officials issued an arrest warrant for Snipes that charged him with conspiring to defraud the Internal Revenue Service and presenting a fraudulent claim for payment to the IRS.

Snipes was charged in Florida because he lived in Windermere in Orange County, Florida, during the years covered by the indictment.

Two other men -- Eddie Ray Kahn and Douglas Rosile -- were charged along with Snipes. Kahn was described in the indictment as the founder of what he billed as a Christian group but allegedly was a "for-profit commercial enterprise that promoted and sold fraudulent tax schemes that interfered with the administration of the internal revenue laws of the United States."

Rosile is described as a former certified public accountant who continued to do accounting work after his license had expired.

According to the indictment, the men claim the IRS is entitled only to income derived from foreign-based activities.

Kahn and Rosile were found guilty on fraud and conspiracy charges.

Lessoff, of the IRS, said Kahn's group is believed to have as many as 4,000 members.

"This was a very high-profile case with us and we're satisfied with the result because it clearly shows you cannot get away with not paying taxes," Lessoff said. "If you are part of this organization, if you're one of them, you need to get in touch with us and make right with us."


Snipes "kooky" mail to govt not a crime: lawyer

January 29, 2008 (Yahoo! Canada News / Barbara Liston) -- Rather than file tax returns on an estimated $38 million in income, actor Wesley Snipes flooded the U.S. tax agency with correspondence that his lawyer admitted on Tuesday was sometimes "kooky, crazy and loony."

"Kooky, crazy and loony is not a crime," the lawyer, Robert Barnes, said in closing arguments at Snipes' trial on tax fraud charges. "This is a case that should have been in civil court."

Prosecutors argued the star of the "Blade" movie series hooked up with known tax protesters and then ignored warnings from Internal Revenue Service agents and his longtime tax adviser that he must file returns and pay taxes.

"He knew it was required. He just didn't want to do it," prosecutor Scot Morris told the jury.

Jurors are expected to begin deliberations on Wednesday on charges that Snipes conspired with IRS foe Eddie Kahn and accountant Douglas Rosile to defraud the government.

Snipes faces up to 16 years in prison if convicted of all charges -- six counts of failing to file tax returns, two of fraudulently claiming tax refunds and one of conspiracy to defraud the government.

Prosecutor Robert O'Neill told Reuters outside the court Snipes "paid no taxes" on what the government said was $38 million in income from the 1999 through 2004, a period when Snipes signed contracts on two "Blade" movies worth at least $10 million each.

Snipes' lawyers have said some taxes were withheld from his pay.

Barnes told the jury that if Snipes is acquitted he still can face civil prosecution, adding "He'll probably spend the next 20 years working for the IRS. They can collect all the penalties and interest they want."

The issue for the jury, according to the thrust of arguments from both sides, is whether Snipes cranked out letters to the IRS in an innocent attempt to engage the agency's procedures, or whether he was gaming the system to criminally avoid paying taxes and get refunds of millions of dollars he paid in previous years.

Among the proofs Morris cited to indicate Snipes knew he was wrong were letters from the IRS dismissing his correspondence as frivolous, and his response to warnings from his longtime tax adviser Ken Starr that he was required to file.

"He was warned explicitly by Ken Starr," Morris said. "Then he decides, nah, I don't like that advice."

Barnes showed the jury a flow chart of IRS procedures for disputing taxes and said Snipes was following those procedures in requesting audits, investigations and meetings.

"Disagreement is not deception. Frivolous is not fraud," Barnes said.

After the prosecution concluded its case, which included cartons of IRS records, Snipes and Rosile declined to put up a defense. Kahn is boycotting the trial, contending the court has no jurisdiction over him.


That explains it...

This is why he's now doing "Total Gym" commercials!



Then Jesus, crying with a loud voice, said,

"Father, into your hands, I commend my spirit."

Luke 23:44-46

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