Tax Fraud—Wesley Snipes

The star of such movies as the Blade trilogy, Jungle Fever, White Men Can’t Jump, The Art of War, and Passenger 57, has been indicted on federal tax fraud charges. Wesley Snipes has been accused of “fraudulently claim[ing] refunds totaling nearly $12 million in 1996 and 1997,” as well as “not filing any returns for six years.”^[1] It is also alleged that he conspired with “the firm American Rights Litigators,” [hereinafter ARL] which has “a history of filing false returns to reap payments for their clients,” and which “would receive 20 percent of refunds from clients.”^[2] In total, Mr. Snipes was charged with one count of conspiracy, one count of making a false claim to a United States agency, and six counts of failing to file income tax returns.^[3]

Currently, Mr. Snipes’ whereabouts are unknown.^[4]

Also indicted were members of ARL, “tax preparer Douglas Rosile and tax shelter promoter Eddie Ray Kahn.”^[5] Mr. Rosile has surrendered to authorities and Mr. Kahn is believed to be in Panama, making an extradition request likely.^[6]

Count One of the indictment alleges a violation of 18 U.S.C. § 371, which requires the government to prove beyond a reasonable doubt that the defendant and at least one other person conspired to commit an offense against the United States and then commit some overt act in furtherance of that offense. The punishment for doing so is a fine, imprisonment for up to five years, or both. Some of the alleged overt acts, among the many listed in the indictment, are that Mr. Snipes paid Mr. Kahn a consulting fee, that Mr. Snipes joined ARL by submitting a membership application and paying its fee, and that Mr. Kahn had a telephone conversation with Mr. Snipes asserting that Mr. Snipes was not subject to federal income tax.^[7]

Count Two of the indictment alleges a violation of 18 U.S.C. § 287, which states that it is a crime for a person to make a false, fictitious, or fraudulent claim to any department or agency of the United States. The punishment for doing so is a fine, imprisonment for up to five years, or both. The alleged false claim in Mr. Snipes case was “an amended federal income tax return … for … [Mr.] Snipes for the tax year 1997, wherein a claim for an income tax refund in the amount of $7,360,755.00 was made.”^[8]

Counts Three through Eight of the indictment allege violations of 26 U.S.C. § 7203, which makes it a crime for person, who is required to pay a tax, to willfully pay the tax or file a tax return. The punishment for violating this section is a fine of up to $25,000 ($100,000 if a corporation), imprisonment for up to a year, or both, as well as paying the costs of prosecution. According to the indictment, Mr. Snipes failed to file his taxes for calendar years 1999 through 2004.^[9]

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[1] Wesley Snipes Indicted for Tax Fraud, AP (via MSNBC.com), Oct. 17, 2006.
[2] Id.
[3] Indictment, infra, note 7.
[4] Id.
[5] Pedro Ruz Gutierrez, IRS: Actor Snipes Didn’t File Tax Returns, Sun-Sentinel, Oct. 17, 2006.
[6] Robert Green, Wesley Snipes Charged With Tax Fraud, Reuters, Oct. 17, 2006.
[7] United States v. Snipes, No. 5:06-cr-22 (M.D. Fla. 2006), at 7-10.
[8] Id. at 11.
[9] Id. at 12-13.