The DOJ has Prosecuted Several Celebrities for Tax Fraud in Recent Years
If you have committed tax fraud, the U.S. Department of Justice (DOJ) doesn’t care who you are or what you do for a living. The DOJ prosecutes individuals in all occupations for tax fraud involving all amounts, from blue-collar workers who owe less than $10,000 to celebrities who have failed to pay tax on millions of dollars in income for several years.
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Brian J. Kuester
Former U.S. Attorney
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Amanda Marshall
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John W. Sellers
Former Senior Trial Attorney
U.S. Department of Justice
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Linda Julin McNamara
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Joanne Fine DeLena
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Aaron L. Wiley
Former Federal Prosecutor
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Roger Bach
Former Special Agent (OIG)
Chris Quick
Former Special Agent (FBI & IRS-CI)
Kevin M. Sheridan
Former Special Agent (FBI)
Ray Yuen
Former Supervisory Special Agent (FBI)
Dennis A. Wichern
Former Special Agent-in-Charge (DEA)
12 Celebrities Who Have Been Charged with Tax Fraud
Here are twelve examples of celebrities who have been charged with tax fraud in recent (and in some cases, not so recent) years:
1. Martha Stewart
While Martha Stewart’s most infamous run-in with federal authorities arose out of her sale of ImClone shares in the early 2000s, her widely publicized insider trading case was not her first brush with the law. In 2002, Martha Stewart was held liable for $220,000 in back taxes, interest, and penalties related to income she earned in 1991 and 1992 while splitting time between New York and Connecticut.
2. Pete Rose
Pete Rose is another celebrity whose tax fraud case received relatively little publicity in comparison to other much more widely publicized transgressions. While the one-time baseball hero is now most well-known for betting on games, he also received a five-month jail sentence and a $50,000 for tax fraud in 1990. According to media reports from the time, Pete Rose’s tax fraud sentence was the result of failing to report more than $350,000 in income earned from memorabilia sales, autographs, and gambling.
3. Darryl Strawberry
Darryl Strawberry also served prison time for tax fraud in the 1990s. The baseball superstar and his agent were indicted on federal tax fraud charges in 1994, and he pled guilty in 1995. According to reports, the case involved unpaid taxes on more than $500,000 in income that Darryl Strawberry earned from 1986 through 1990.
4. H. Ty Warner
The name H. Ty Warner might not mean much to some—unless you focus on the “Ty.” Mr. Warner was the creator behind the Ty Beanie Babies that took the world by storm in the 1990s. According to reports, H. Ty Warner failed to report at least $24.4 million in foreign bank account interest to the IRS, resulting in an underpayment in excess of $5.6 million. Reports indicate that he paid millions in back taxes and penalties, and was able to serve probation and community service in lieu of federal prison time.
5. Toni Braxton
Toni Braxton is the first of several musicians to be included on this list of celebrities who have been charged with tax fraud. When Toni Braxton went through bankruptcy in 2010, she was not able to eliminate her outstanding tax liability, and ended up with a $396,330 tax lien from the IRS. Reports indicate that she owed taxes to the State of California as well.
6. Marc Anthony
Marc Anthony, another singer who is also known for having been married to Jennifer Lopez, was found liable for owing millions in unpaid taxes in 2007. Even though he was reportedly unaware of the issue as a result of having his business manager handle his taxes for him, Marc Anthony nonetheless reportedly ended up with a $3.4 million tax lien on his home on Long Island. As the Internal Revenue Service (IRS) makes clear, even when taxpayers rely on others to file their taxes, taxpayers remain responsible for the accuracy of their returns.
7. Shakira
In one of the most recent cases of a high-profile celebrity being accused of tax fraud, singer Shakira faced allegations of underpaying nearly $14 million in taxes to the Spanish government. While the alleged underpayments occurred between 2012 and 2014, the case made headlines in 2022 when it was announced that she could face up to eight years in prison if convicted.
8. Lauren Hill
Grammy-award-winning singer and songwriter Lauren Hill was found guilty of tax fraud in 2013 and sentenced to three months in a low-security prison followed by three years of home confinement. She also reportedly paid a $26.1 million fine as well as the back taxes owed for the period in question, which was from 2005 to 2007.
9. Ja Rule
Ja Rule has the distinction of being one of only two celebrities on this list who (at least at the time of writing) has been found guilty of tax fraud twice. He was sentenced to 28 months in jail in 2011 for failing to pay taxes from 2005 to 2010, and then paid $3 million in fines a decade later after failing to pay taxes from 2012 through 2017.
10. Nicholas Cage
Movie actor Nicholas Cage made headlines in 2009 when it was reported that he had spent his entire $150 million fortune earned from movies like Face/Off and Gone in 60 Seconds. Media reports indicated that he was also massively in debt—including more than $12 million in delinquent property taxes owed to the IRS. While reports indicate that he had paid off approximately half of this debt by 2012, it isn’t entirely clear where he stands with the IRS today.
11. Wesley Snipes
Wesley Snipes is another movie actor who famously fell behind on his federal income taxes in the early 2000s. After losing an appeal, he was ordered to pay a $5 million fine plus $7 million in back taxes in 2008. He was also sentenced to three years in federal prison for tax fraud. In 2018, Wesley Snipes again found himself in trouble with the IRS, reportedly owing an additional $9.5 million in back taxes.
12. Richard Hatch
Richard Hatch was a household name in the early 2000s as a result of appearing on (and winning the first season of) the reality show, “Survivor.” According to reports, he was sentenced to 51 months in prison in 2006 for failing to report more than $1 million in income to the IRS. While he was released less than four years later, he was reportedly put back behind bars in 2011 after failing to refile his taxes from the years in question and failing to pay the taxes he still owed from this time.
FAQs: Defending Against State or Federal Tax Fraud Allegations
What Is Tax Fraud?
While tax fraud charges filed against celebrities often make headlines, many people (including many of these celebrities) don’t have a clear understanding of what exactly tax fraud means. Simply put, tax fraud involves paying less to the IRS (or a state tax authority) than a taxpayer legally owes. Failing to file tax returns, failing to report taxable income on tax returns, and failing to pay taxes owed are all common forms of tax fraud. Generally speaking, when it comes to facing allegations of tax fraud, being unaware of one’s responsibilities or not having the funds to pay is not a valid excuse. The IRS holds all taxpayers responsible for understanding what they owe and for paying what they owe on time.
Do Celebrities Get Off Easy for Tax Fraud?
While some celebrities may get off relatively easy for tax fraud, this is a function of their defense strategy, not their celebrity status. The IRS and state district attorney’s offices have come down hard on celebrities for tax evasion in many cases. Several well-known celebrities have served prison time for tax fraud; and, in some cases, prosecutors will take advantage of the publicity surrounding celebrities’ tax fraud cases to set an example for other taxpayers.
How Do Celebrities (and Others) Defend Against Tax Fraud Allegations?
While tax fraud allegations carry the risk for substantial penalties, celebrities (and others) will be able to successfully defend against these allegations in many cases. In fact, for every publicized case of a celebrity being convicted of tax fraud or facing a multi-million-dollar IRS lien, there are almost certainly several more that ended quietly without charges being filed. Arguing lack of willfulness is a key defense strategy in many cases (willfulness is an element of the government’s case under most federal tax fraud statutes); and, in some cases, celebrities and other taxpayers will be able to work with their counsel to demonstrate that they have adhered to a legally compliant tax avoidance strategy.
What Should You Do if You Are Facing Allegations of Tax Fraud?
If you are facing allegations of tax fraud, you should contact an experienced defense lawyer promptly. This is true whether you are a celebrity or anyone else. Tax fraud allegations can lead to substantial fines and prison time, and avoiding these consequences (or at least mitigating them) requires a strategic and proactive defense.
Contact Us for a Confidential Consultation at The Criminal Defense Firm
The Criminal Defense Firm is a team of former DOJ prosecutors, former high-ranking federal agents, and career defense lawyers who have a proven record of success in high-stakes federal cases. If you need help defending against allegations of tax fraud, we encourage you to call 866-603-4540 or contact us online for a confidential consultation.