It takes a certain type of person to attempt to cheat the United States government out of the money duly owed to them via taxes. Those who are willing to take this risk are putting their person freedom and liberty at risk by doing so. Obviously, it is a crime to not pay the taxes that you rightfully owe. Therefore, it is no wonder that we marvel at some of those who are willing to take this gamble just to try to save themselves some money, or simply because they do not agree with the way in which their tax dollars are spent. The following is an overview of the 15 biggest tax cheaters from US history and the stories behind their misadventures.
1. Al Capone
Let us start with the obvious and perhaps most famous tax cheat in American history. No matter who you are in America or even how old you are, you are likely to have heard of the infamous Mob Boss. The Federal Government had plenty of reasons to want to get their hands on Al Capone, but in a lot of cases they simply do not have the hard proof to bring him in on other charges. However, violating the tax code was something that they were able to find plenty of evidence for. Considering all of the documentation required for filing (or in his case not filing) taxes, it is perhaps the most concrete way to capture some criminals.
Capone was the target of a three year investigation into his finances and bookkeepers. It was uncovered that he had illegally avoided some taxes that he owed. Therefore, in 1931 Capone was dragged into court and plead guilty to charges of tax evasion. He was ordered to pay over $200,000 plus interest on backed taxes. In today’s dollars that would be more than $3 million.
2. Wesley Snipes
Just because you are a famous person with natural abilities and talents that are well respected and well compensated does not mean that you get a pass when it comes to the tax man. In fact, the opposite may be true as those who make a lot of money in a given year are generally given extra scrutiny in terms of their taxes. Wesley Snipes had to learn this lesson the hard way.
The A-list Hollywood star had failed to file his taxes for several years. This led to mounting backed taxes that totaled up to somewhere around $12 million that was not paid for. Worse yet, the government adds on penalties for failure to pay, so at the end of the day Snipes was on the hook for some $17 million plus interest when it was all said and done. In his case the crime was so bad that he was actually sentenced to three years in prison for the crime as well.
3. Willie Nelson
Yikes! Another superstar who ran into tax problems. Willie Nelson had his issues with the IRS in 1990. They took a look at his returns all the way back to 1972 and figured out that the music star underpaid his taxes by about $17 million. He had a considerable amount of property and other valuables that made it easy for the IRS to seize such valuables and auction them off to help cover the cost of all of those unpaid taxes.
4. Dennis Kozlowski
It wouldn’t be a great list of tax cheaters if it did not include at least one CEO. Despite being some of the most highly compensated individuals in the world, there are some executives who can just never seem to get enough. This was the case for the now former CEO of Tyco International Dennis Kozlowski.
This CEO was not afraid to splash around his wealth, and he had a taste for very expensive paintings. He purchased nearly $15 million worth of very high end paintings in a short period of time but decided to skip out on the corresponding taxes that he should have paid on those purchases. This was uncovered by the IRS and Kozlowski was ordered to pay over $21 million to settle the charges.
The news only got worse from there for Kozlowski as he and CFO Mark Schwartz were also convicted of stealing some $600 million from Tyco during their leadership reign over that company. As a result, Kozlowski finds himself serving an 8.33 to 25 year prison sentence.
5. Reuben Sturman
This individual was in the adult entertainment business for most of his life. When he was not avoiding his taxes, he was helping spread pornography far and wide throughout the country and even the world. In fact, for a period of time Sturman was the leading distributor of this type of material in the whole world. That is not an easy thing to accomplish.
From 1978 to 1982 Sturman was found to have avoided paying some $2.7 million in taxes. This was uncovered during one of the numerous raids on Sturman’s properties. He was often a target of such police action as a result of pornography not being seen in as kind of a light as it is today. It was judged sternly, and those involved in it were often seen as criminals simply for being involved with it. As a result of being under that kind of microscope, it is perhaps not that surprising that it was determined that Sturman was avoiding his taxes. In 1989 he was sentenced to a 10 year prison stay.
6. O.J. Simpson
O.J. Simpson or “juice” as some fans affectionately called him was always getting into all sorts of different types of trouble. Tax evasion was just one on a long list of things that Simpson was either convicted of or suspected of. Not the least of these of course was the double murder charge that he was acquitted of. All of that being said, it is certainly true that the man was guilty of tax related charges.
The State of California announced in 2007 that O.J owed more than $1 million in unpaid taxes. It was not long after this announcement however that he was arrested for breaking into a Las Vegas casino to steal some sports memorabilia that once belonged to him. As a result of this robbery, Simpson was sentenced to nine years in prison and therefore will likely avoid any punishment for the tax issues, at least for the time being.
7. Edward And Elaine Brown
This couple is a member of this list that truthfully believed that they were doing the right thing by not paying their taxes. They did not do it merely because of an ego trip or because they wanted to save some money. Rather, they were taking what they thought was a stand against the Federal Government for the greater good.
They had a several months long standoff with federal agents at their New Hampshire home in 2007 garnering many news headlines. They quickly became heroes of all of those who would rather not pay their taxes. They seem to have taken the “live free or die” motto to its extreme ends with this one.
At the end of a long period of time the standoff ended and no one was hurt. However, the couple are serving 35 and 37 year sentences respectively. According to a New Hampshire newspaper, the amount owed by the Browns exceeded $3 million.
8. Heidi Fleiss
This individual was a story line in the 1990s both for the fact that she had avoided so much in taxes, but also because it was uncovered that she was running an undercover prostitution ring of sorts. She was operating the ring in Hollywood and as a part of it, she was doing some money laundering activities as well.
When this was all uncovered and investigated, Fleiss was ordered to serve a 37 month prison sentence as well as pay back an undisclosed amount in taxes. As part of the agreement, she had to sell off a home in Beverly Hills worth more than half a million dollars.
9. Leona Helmsley
There was perhaps no one better known for being mean than Leona Helmsley. It was just a part of the character that she presented to the world, and everyone knew it. Therefore, it was not a surprise to many when it turned out that she illegally billed over $8 million worth of work to her hotel company to avoid paying taxes on it.
Helmsley was among the most brazen of folks on our list. She was not afraid to say things like “only little people pay taxes” in the course of an interview. It was a statement that showed that she did not particularly believe that certain laws applied to her, and that this was the way that it should be.
At the end of the day perhaps the little guys got the last laugh. Helmsley had to spend 18 months in prison and is reported to have later died as a lonely woman. She left some $12 million in a trust fund to the dog that she owned.
10. Walter Anderson
Why would Walter Anderson need to hide his income when he was making so much to begin with? That is what many have wondered over the years. He earned a reported $126 million in the year 1998 alone from his work in the telecommunications industry, but only reported income of $63,000 and only paid slightly under $500 in taxes. Good luck trying to get by with that massive of a scale of fraud.
He had to face the music in 2006 and agreed to a plea deal where he would serve nine years in prison. Despite taking this deal, Anderson still tries to make the claim that he is innocent of the charges. It is hard to see how that could be the case given all of the facts that we now know about this one, but that is the story he is sticking by.
11. Annie Lelbovitz
Annie Lelbovitz had an interesting profession to be a part of this list. A photographer by trade, you might not expect that some in that field could have a tax evasion case so famous as to make a big list like this. However, if you are good enough at what you do, you can make a lot of money in virtually any field.
Lelbovitz was a very famous American photographer who earned a lot of money for her work. Unfortunately, she did not care so much to report all of those earnings. In particular between the years 2004 and 2007 this individual decided to skip out on fully reporting those earnings. As a result, Lelbovitz was later forced to pay backed taxes of some $1.4 million plus interest and penalties. At least in this case, Lelbovitz was able to avoid the real risk of jail time.
12. Lauryn Hill
Another top music star makes the list. Lauryn Hill failed to pay over $1 million in taxes that she owed and was caught for it. She of course being the Grammy winning star and fan favorite. However, once again popularity with the fans does not shield you from the long reach of the IRS.
In terms of scale on this list, the crimes committed by Mrs. Hill were actually relatively small. It is still a great sum of money to most of us, and it is still money that was rightfully owed to the government, but considering all factors in the case, Hill was given a light jail sentence. Ordered to just three months in a minimum security prison, Hill will be expected to do some chores around the jail such as yard work.
13. Joe Frances
Joe Frances was already a controversial figure before he ran into trouble with the tax man. He is the founder of the “Girls Gone Wild” franchise and as such has his own fair number of supporters and detractors. It should perhaps be no surprise then that when allegations of tax fraud started to spring up around this guy, there was plenty of fierce debate about who he was as a person.
Setting all of that aside, the facts remain that in 2007 he settled two cases of tax fraud in which it was determined that he had taken false deductions worth more than $20 million. He had to pay back a certain portion of that money as part of the settlement.
Frances has been the subject of a number of lawsuits and legal troubles aside and apart from his issues with the IRS. He has served time for some of these charges and been forced to pay money to some of his victims. It seems that wherever he goes he is bound to attract problems and attention.
14. Pete Rose
Pete Rose may be best known for ruining the game of baseball, at least for some fans. Of many years of public pressure to do so, Rose finally admitted to having bet on baseball games while he was a coach of the Cincinnati Reds team. This admission from a former coach threw the whole validity of the game into question for some. Long before he admitted to it Pete Rose had already been accused of such actions and banned from the game for life.
Even with all of this history, Pete Rose was not yet done with other troubles that would follow him. He also had trouble with the IRS for not filing income of about $350,000 from memorabilia sales that should have been taxed. There were two counts related to that event, and each count carries a potential fine of $250,000 and the potential to serve up to three years in prison for each count. At the time of those charges, Pete Rose said that his gambling addiction was the source of his problems and that he was seeking treatment for the addiction. He also hoped his case would raise public awareness of gambling addiction and hopefully help others recognize it in themselves.
15. Richard Hatch
Sometimes sudden wealth can be a problem for those who have never had it before. It can be difficult for them to manage in general, but it can be particularly troublesome when it comes to determining how much to pay in taxes and making sure that all of that work is done properly. Richard Hatch is the perfect example of this issue.
As the winner of the very first season of the popular reality TV show “Survivor”, Richard Hatch was entitled to a $1 million prize. He got that money but failed to report any taxes on it. That of course was a huge red flag for the IRS and it was caught quite quickly.
Although he could have served up to 13 years in prison for this crime, Hatch ended up serving just 51 months after being found guilty by a jury.