By now, I’m sure many of you have seen the Old Navy commercial starring Kim Kardashian Melissa Molinaro, a curvy, dark-haired Kim Kardashian lookalike who bursts into song and dance while looking “super C-U-T-E” in her Old Navy duds. Like many of you, I did a double take when I saw this commercial for the first time. Upon closer examination (read: once I caught a glimpse of the star’s normal-sized backside and nimble dance moves), I realized the star of the commercial was not Kim, but just a woman with a striking resemblance to the reality TV star/fashionista/walking proof of the decline of Western civilization.

After the commercial first aired in February, articles devoted to Old Navy’s use of Kim’s spitting image popped up all over the Internet. Molinaro herself has called the comparisons to Kardashian “extremely flattering” — but of course, who’s to say whether Kim herself would agree? So, naturally, upon first viewing Molinaro’s commercial, the lawyer in me immediately thought, “Can Kim sue Old Navy for using her lookalike in a commercial without her permission?” Then, the blogger in me thought, “I should write a blog about this!” (Then, the normal human being in me thought, “What have I become?”) So, let’s see if the law is on Kim’s side. Continue Reading Old Navy Is Definitely “Keeping Up with the Kardashians”

In celebration of Tax Day today, we here at Law Law Land offer tribute to our favorite celebrity/IRS run-ins.  Now, lest you think this is just another list airing dirty celebrity tax laundry, think again.  This is a classy publication, as you well know, so if you’re looking for dirt on which celebrities owe what, look elsewhere. . . like here, or here, or here.  Instead, on this national day of tax collection, Law Law Land is pleased recognize five (or more) of our favorite celebrity tax stories of all time… so far.

Honorable Mention:  Timothy Geithner

In our Honorable Mention category of “Really, Are You Kidding Me?,” we recognize former Treasury Secretary (i.e., head of the U.S. Treasury, the folks you make that tax check out to) Timothy Geithner, who underpaid his personal federal income taxes from 2001 to 2004 by failing to report and pay social security and self-employment tax on income received from the International Monetary Fund.  Mr. Former Secretary subsequently amended his returns since he “should have been more careful.”  We imagine he regretted his “unintentional” decision not to report that income when appearing before the Senate Finance Committee during his confirmation hearings to control the United States’ piggy bank.

Honorable Mention:  Nick Diaz

In our Honorable Mention category of “How Dumb Can You Be?,” the award goes to MMA fighter Nick Diaz, who recently announced during a post-match press conference that he has “never paid taxes in his life” and “is probably going to jail.”  Well, if Nick had only read about some of the other people on this list, then he definitely would have seen that coming!

 

#5:  Richard Hatch

hatchAlthough the name “Richard Hatch” might not mean much to you, you may better remember Hatch as “Consistently, Inexplicably Naked Man” on Season 1 of Survivor, where his penchant for letting it all hang out was somehow rewarded with the show’s first-ever $1 million grand prize.  Well, Dickie may be able to eat rats and bugs with the best of them, but a federal judge voted him off the island and straight to prison for failure to report and pay tax on $1.4 million of income (including the $1 million Survivor payout, hard-earned through relentless backstabbing, conniving, and pantslessness.  While his tour of duty on Borneo island may have only lasted 39 days, Hatch’s fully clothed prison stint lasted a total of 51 months (including time for perjuring himself during his tax trial).  Well, at least he learned his lesson.  At least, that’s what the infomercial says.

Following Hatch’s sentencing, the Department of Justice press release announced, “Our nation’s federal tax system is not a reality show to be outwitted, it is a reality, period.”  Take note,Kardashians!

#4:  Wesley Snipes

Just this month, Wesley Snipes bid adieu to the federal prison in McKean County, PA he has called home for the last 3 years, courtesy of his tax woes with Uncle Sam.  Convicted of snipestax evasion for willfully failing to file income tax returns (take notice, Nick Diaz), during his sentencing, prosecutors proclaimed that he had earned $38 million since 1999 but had filed no tax returns nor paid taxes through October 2006.  Snipes’ defense:  arguing he was not actually required to pay taxes based on a misguided interpretation of the tax code that has been uniformly rejected by all courts and resulted in at least 8 people being sentenced to prison.  (Well, ninth time’s the charm, eh?  Or not.)

In true Blade vampire hero fashion, Snipes ultimately took a bite out of his advisors and blamed his predicament on bad professional advice.  For what it’s worth, the “but it’s my tax advisor’s fault” defense (i.e. reliance on professional advice) is no longer a valid defense for most tax controversies with the IRS — or, it’s safe to assume, for any controversies where the “advice” was “of course you don’t have to file or pay taxes ever at all!”  And, while your manager may be willing to pick up your dry cleaning or walk your dog, I doubt he’s willing to go to jail for you.

Wesley Snipes appealed his case all the way to the Supreme Court, but they decided not to entertain his antics.

#3:  Joe Francis

francisComing under the category of why not to mix business with pleasure, the man responsible for bringing us Girls Gone Wildfound himself exposed (and not in the Mardi Gras, party beads kind of way) when he was turned into the IRS by his former tax return preparer, Michael Barrett, under the IRS’s “Whistleblower” program, by which the IRS actually pays people to rat out their tax-cheating friends, families, estranged business partners, corporate rivals, and other loved ones.

Francis was charged by the IRS with claiming more than $20 million in false business expenses on his companies’ corporate income tax returns, omitting interest income on brokerage accounts, and using offshore bank accounts to conceal other income.  According to media reports, the case fell apart when Barrett, the government’s key witnesses, was himself accused of embezzling funds by overbilling Francis’ company hundreds of thousands in fees and expenses for work never performed, while at the same time hoping for an IRS payday by turning Francis in.  (But hey, who could be a more qualified judge of financial crimes than someone with a little experience in the field himself?)

Claiming “victory” against the IRS (here, defined as “much less defeat”), Francis ultimately pleaded guilty to two  counts of submitting false tax returns omitting $562,000 of interest income relating to the brokerage accounts (and, oddly, one count of bribery for paying a prison guard over $5,000 for contraband food).

#2:  Al Capone and Heidi Fleiss

caponefleissAl Capone and Heidi Fleiss.  Two American heroes (to some, at least).  Purveyors of many fine, sought-after services.  But it wasn’t Capone’s notorious bootlegging or Fleiss’s infamous “little black book” that landed these twentieth century titans of industry in jail:  it was tax evasion.

Capone was never actually indicted for any “major” criminal activity, despite the fact that he was the most notorious rum-runner of his day, and was (allegedly) responsible for an event with the wordMassacre in the title.  No, the agency that finally brought down Capone wasn’t the FBI or the ATF:  it was the IRS, which forced Capone behind bars on federal tax evasion charges.  After a federal judge refused to honor a 2 ½-year plea bargain that Capone initially struck with prosecutors, he was convicted of owing $215,000, plus interest (which, in today’s dollars, amounts to more than $3.2 million) in back taxes, and was sentenced to 11 years in prison.  After serving 7 ½ years (some of which, famously, at Alcatraz), and having paid all his back taxes and fines imposed by the Court, Capone was released from prison.

Similarly, the well-known title of “Hollywood Madame” wasn’t enough to land the pimp-turned-parrot ringleader, Heidi Fleiss, behind bars.  Rather, it was the taxes she failed to pay on (and the money laundering committed with) her earnings in the pleasure business that landed Fleiss a 37-month jail sentence in 1997.  (A 3-year prison sentence for a 1993 conviction for pandering was overturned on appeal based on improper juror conduct.)

Following her federal prison stay, Heidi tried to get back to business doing what she does best — albeit legitimately this time (where’s the fun in that?) — and attempted to open a brothel in Nevada, but eventually abandoned that plan.  Ever the entrepreneur, though, Fleiss still managed to make lemonade out of prison-time lemons, penning a successful memoir, Pandering.  So take heart!  You too can have her splayed… sorry, we mean displayed… on your coffee table.  Let’s hope she paid tax on her book profits.

#1:  Willie Nelson

nelsonThere could never be any doubt that Law Law Land’s Award for Overall Achievement in Tax Problems would go to a musical icon and American legend who collected the greatest hits of his career to date under the title, The IRS Tapes:  Who’ll Buy My Memories?

It turns out the answer to that question is:  enough people to generate $3.6 million in sales, all of which was turned over to the IRS to satisfy a portion of Nelson’s approximately $16 million debt to the IRS.

Unlike many of our other award winners, Nelson’s spar with the IRS was not for failure to file or failure to pay, or failure to use common sense, but primarily for claiming invalid deductions related to tax shelters the IRS subsequently discredited and disallowed — resulting in a judgment for $6 million in back taxes, plus approximately $10 million in interest and penalties.  After just about all his worldly possessions were sold, Willie recorded the compilation album that is just “him and his guitar,” about the only thing he had left.

Nelson eventually sued his tax preparers, Price Waterhouse, charging that they failed to adequately investigate the tax shelters that led to this uniquely tax-related moment in musical history.  The company denied responsibility, but agreed to an undisclosed settlement with Nelson — though not before arguing that he was better off even with their “bad advice” because he settled with the IRS for $3.5 million less than he would have owed had he not claimed the shelters in the first place.  (Then again, Nelson qualified for a special discount because he was bankrupt.)

But Nelson kept his chin up through the legal battles and property sales, saying “The things that did sell were just things.  So actually, I haven’t lost anything.”

Except, you know, all the things they sold to pay the debt.

So What Have We Learned?

It should come as little surprise that celebrities don’t like paying taxes any more than the rest of us.  But what lessons can we draw from our famous friends?

1.         Pay your taxes, especially if you earned your money strutting your stuff on the beach on national television (again, Kardashians, take note).

2.         If you are going to claim you are above the fray and don’t have to pay taxes like the rest of us, at least pick a rationale that hasn’t been debunked by every court which has heard the argument and landed 8 people in prison before you.

3.         While getting girls to loosen up on camera might make you millions, playing fast and loose with the IRS will land you in hot water (and not the hot tub in the back of a limousine filled with girls kind).

4.         If you’re earning money from conducting illicit criminal activity, the crime of not paying tax on that income is sure to get you; and

5.         When your career achievement is recording a soundtrack for the IRS, it’s time to call it a day.

Have a favorite celebrity/IRS showdown from this list, or one we didn’t cover?  Let us know in the comments section.  After you file your tax returns.

An interesting footnote to last week’s post, revisiting our “5 Cases to Watch” for 2012.

Last week, I wrote that while talent manager Rick Siegel’s legal war with his former client — which had since morphed into a crusade against California’s Talent Agencies Act writ large — was over, the fight had been taken up by Siegel’s colleagues at the National Conference of Personal Managers, which, in November 2012, brought a direct constitutional challenge against the Talent Agencies Act in federal court.  As part of my preview of the case, I noted that the case “may still be a long shot — anytime someone tries to claim that a law violates the Thirteenth Amendment’s prohibition on slavery, you have to raise your eyebrows a little.”  But this week, I received a reader correction from Mr. Siegel himself, who writes:

Ken,

The 13th Amendment claim isn’t about slavery.

The 13th Amendment of the United States Constitution states in part:  “Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.”

So to be constitutionally compliant, the benefit of one’s labor can only be voided should there exist: (1) a statute stating that such labor was criminal; and (2) a finding been forfeited must have been found duly convicted of that crime.  Every other California occupational licensing scheme where one loses the right to contract has statutory notice that the unlicensed engagement of activity is a criminal offense and makes that engagement either misdemeanor or felony, the TAA expressly states that per § 1700.44(b) that no TAA violation can be considered criminal.  As the action can’t be seen as criminal, the penalty violates the 13th Amendment.

The original post has been revised to refer to “involuntary servitude” instead of slavery.  Lawyers for the State of California, the Association of Talent Agencies, and celebrities who just like being able to not pay their estranged personal managers may, of course, disagree with Mr. Siegel’s interpretation of the Thirteenth Amendment, but let it never be said that Law Law Land doesn’t strive to be fair and precise in its snark.

As for me, I’m just psyched to have gotten (politely) called out by a celebrity of recent history in California law.  Can’t wait for Kim Kardashian to email the blog next!

I tried, Law Law Land readers, I really, really tried. I struggled, but alas, I was not strong enough to stop myself from writing about the Kardashian divorce.

The 72-day marriage (if it can even be called that) of Kim Kardashian and Kris Humphries (herein referred to as “KK,” or maybe “666” would be more appropriate), is chock full of legal issues. What about the pre-nuptial agreement? (“Ironclad,” I’m sure, but speculation is already swirling about whether Kim’s “shady behavior” has rendered it “worthless.”) What to do with the gifts? (Apparently Kim is donating$200,000 to charity in lieu of returning the gifts. I’m sure the people who bought her the $375 candy jar, or $6,500 vase, or $1,250 serving spoon, or $1,600 teapot, or $840 ashtray are thrilled about that decision and the tax write off she gets. And no, I did not make up those items or prices). Why isn’t gay marriage legal and this is? (Beats me, but it really makes you think about that whole “sanctity of marriage” argument.)

No, you aren’t having a stroke, it really is that big and shiny.

But the burning issue I want to write on? What happens to THE RING? (I think the 20.5-carat sparkler deserves all-caps treatment.) Continue Reading Losing all Faith in Love (and Reality Television)