Wesley Snipes first Day in Prison – A reflection from personal experience – SECOND CHANCES by Chuck Gallagher

Yesterday was Wesley Snipes first day in prison.  Today…the first full day I know how he feels.  I’ve been there.  It is no fun…

Here’s an excerpt from my new book SECOND CHANCES that might give a glimpse of what that first day’s experience is – or at least – was for me.  We all make mistakes, but as I was told – “You’ve made a big mistake, but YOU ARE NOT A MISTAKE!”  Those words were powerful and in many ways saved my life.

Wesley’s life is powerful and it is my hope that Wesley can move past the feeling that he’s somehow a victim, to the recognition that all thing happen for our good if only we will become still enough and reflect inward enough to find it.  Here’s to Wesley’s time – may it be beneficial to him and may he use it and his celebrity to bring light and love to others.

SECOND CHANCES EXCERPT:

By 3:25 p.m., I had been fully processed and was escorted to my cell, my new home. As I entered the cell, my cell mate, Buck, an African-American man of mid-stature, walked out. He gave me a quick once-over, never uttering a word. By this time, I had been instructed to change into my prison uniform and be prepared for “count time” at 4:00 p.m. I guess that meant something to most people, but it didn’t connect with me. Doing as I was told, I changed and sat on the bed assigned, waiting for further instructions.

At three minutes to 4:00 p.m., Buck reentered the cell. He just looked at me again─sizing me up, I suppose. Then a noise broke the chatter of inmates in this area.

“Count time. Count time.”

Again, Buck looked at me, pointing at the floor as if I knew what to do. I stood up just as the guard passed by our cell, counting each inmate as we stood in silence. I watched others, waiting for a cue as to what to do next. When the count was done, the chatter began, and once again, Buck left the room with no comments.

Seated on my excuse for a bed, I began to drift into a contemplative state. Now disconnected from all that I knew, all that was familiar, I was preparing to enter a part of life that would prove to be painful.  And yet, it was an opportunity for accelerated growth. We all have thoughts, beliefs, and associations; we interpret and make judgments. I did not, at that moment, think of prison as a place for growth; rather, it was a place of dread, a place to be endured. I would assume that most people feel that the consequences they face, especially if they judge them to be negative consequences, are unwanted and carry no benefit other than pain. Yet, through experience─my own as well as what is reported by others─often the worst experiences we face are our greatest teachers if we are open to allowing the lesson.

As the first night began to pass, I can’t say my first day in prison was fraught with any danger. I was just a number. I was another person placed somewhere where he didn’t want to be, dealing with the internal issues of doing time for something and learning in a new and unfamiliar environment. Staring at the ceiling of the cell and trying to get warm under the prison-issued sheet and blanket, I wondered if there was ever a time when the choices I made were worth the price.

My eyes welling with tears, but crying my first night was not an option.  Before the crack of dawn on day two, the guards banged on the door to the unit and began flashing on the lights. Buck was immediately out of bed as the workday began. I, on the other hand, was bewildered. I suppose I expected prison to be a place where you stayed in your bed until you wanted to get up, did nothing, and did nothing some more.

Buck looked up at me, as I was on the top bunk.  “You better get up and get out of here before 8:00 a.m. or the ‘hacks’ will put you to work.” With those words, Buck was off to his job.

It was 6:45 a.m.

Well, he talks, I thought to myself, not knowing what to do. Just then, the silence was broken. Another inmate, a middle-aged guy, poked his head around the corner.

“You eat?” he asked with a tentative look on his face, as if he might have disturbed me.

“Your first day here?”

“Yeah,” I replied, honestly glad to have someone who showed some interest. Not that I expected a welcoming party, but rarely had I ever been somewhere where you were looked right through, as if you were nobody. Perhaps it was learned behavior, but even in the “projects,” people seemed to have some basic level of respect and concern. Yet, except for the African-American guy from yesterday, no one seemed to care. Well, not until now.

“I’m Ham.”

“Chuck,” I replied. He offered no hand, and neither did I. I had already made up my mind that I would observe and take my lead from others who had been here awhile. I did not know the ropes, and being a leader in prison was not something I had ever aspired to.

“Follow me. Let’s get some breakfast.” With that, Ham moved out, expecting me to follow. “Now, don’t expect much. You know, the inmates do the cooking around here. The breakfast bunch, well, they ain’t the best. The dinner cooks, well, that’s another story. They’re pretty good. We’ll get some good chow at night.”

WHAT’S WESLEY’S FIRST DAY LIKE…

Well..in the case of “Blade” I suspect that it was a mixture of celebrity, concern and disconnection.  Prison (minimum security or not) is prison and it is different.  This morning Wesley Snipes had his first prison breakfast and many eyes are on him as he begins this new journey in his life.  Perhaps we can put aside our feelings of his guilt or innocence or feelings of appropriateness of his sentence and join to wish him well…

YOUR COMMENTS ARE WELCOME!

Snipes worried about Prison – looking for Supreme Court Relief! What will prison be like for Wesley?

Appearing on Larry King Live – Wesley Snipes took his argument to stay out of prison to the public stating that he was hopeful that the system of justice will smile in his direction if (and that’s a big if) the Supreme Court hear his appeal.  Will they?  DOUBTFUL.

“We still have prayers out there. We still believe in miracles. So don’t send me up the river yet,” Snipes said in an interview on Larry King Live last night.  Tomorrow he will report to Federal Prison in PA and begin what will be a life changing event for him – over 30 months of confinement in federal prison.

Snipes’ avoided felony charges in his tax trial, but was convicted of misdemeanors for not filing tax returns in 1999, 2000 and 2001.

“I think any man would be nervous if his liberty is at stake,” Snipes said. “I’m disappointed that the system seems not to be working for me in this situation.”

According to Prosecutors, Snipes earned $40 million since 1999 but had filed no returns and had been involved in a tax resisters group.  The head of the tax resisters group was found guilty of felony tax evasion and is actively serving a prison sentence now.  Of course, instead of accepting responsibility, Snipes disputed such involvement and said that the failure to file was his advisers’ fault.

“This is another thing that has been misreported: It has been framed that I was a conspirator and that I was an architect in a scheme by an organization that has been characterized as tax protesters,” Snipes said. “The press hasn’t reported that I was a client of people who I trusted [who] had knowledge and expertise in the areas of tax law that would protect my interests.”

Personally, I think that Wesley is guilty of attempting to find innocence instead of stepping up or manning up and telling the truth.  Wesley isn’t stupid, he’s quite capable.  Yes, he was knee deep in the throws of believing that this tax protester group had something and that something was an argument that he’d avoid having to pay taxes on a substantial sum of money.

BIG WIN FOR THE IRS

Having face a few losses in this area – one especially from an attorney in Louisiana – the IRS could not afford to let Snipes go free.  He was far to public a figure and if Snipes won, many followers of the tax avoidance scheme would become followers and have a dramatic impact on undermining the system of tax compliance in this country.

According to a CNN article:

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 suggested he was unfairly singled out by prosecutors.

“It does seem to be rather unusual and rather bizarre when you had a prosecutor come into the sentencing and say that this is the biggest tax trial in the history of the IRS,” Snipes said. “I think there is a certain amount of selectivity going on here.”

Honestly, the prosecutors were right.  If Snipes went free…all heck would break loose when it comes to tax compliance.

“There have been some egregious and very malicious efforts to report the facts of this case,” Snipes said. “I was never charged with tax evasion. I’ve never been a tax protester.”

Wesley come on…man up here big guy.  Accept the fact that you weren’t just relying on a reputable firm when you made the choices you did.  You were on the fringe – no where close to main stream when it came to your responsibilities as a US citizen.  And, you know above all, if the government could have convicted you on tax evasion they would have.  You got lucky.  Your only bad luck was being sentenced to prison for failure to file.  I admit – that is unusual – but I also understand.  If you’d filed and paid as you should have you’d be home with your family this Christmas…not in prison.

WHAT TO EXPECT IN PRISON

Those first steps in are tough.  You know as you walk through the door that life is about to change dramatically!

More than likely you’d be placed in a holding cell once you arrive.  You’ll be given a set of rules to read and while you sit there – potentially for hours, you’ll have time to think about what you’re facing.  You’ll think about what you’ve done that got you here and soon…you’ll come to grips with whether you still want to believe that you’re a victim or whether you’ll accept that your choices got you there.

When the keys jingle and the door opens to let you out…you’ll be seen (more than likely) by a physician’s assistant who will give you a TB test and soon thereafter you’ll be taken to the laundry where you’ll receive your prison uniform and bedding.  Once received you’ll walk holding your new clothing across the prison compound for all to see – a fresh new inmate – “Blade” behind bars – potentially a target.  As you step into your cell you’ll meet your cell mate and at that moment you become “one of them” – life will change.

YOUR COMMENTS ARE WELCOME

Wesley Snipes to report to PRISON! Still he seems to be fighting the already lost battle…

Appearing to be somewhat obstinate to the end, Wesley Snipes convicted for tax crimes is headed to prison – much like I predicted over two years ago.  Snipes is scheduled to report to Federal Correctional Institution McKean at Lewis Run, Pennsylvania on December 9.

The crime Wesley was convicted of was failing to file his tax returns – although he was honestly involved in a movement that believes that taxing income is unconstitutional and illegal.

Here’s the post that discusses Wesley’s conviction – https://chuckgallagher.wordpress.com/2008/04/24/wesley-snipes-sentenced-36-months-in-prison-for-failure-to-file-tax-returns/

A 36 month sentence means that Wesley will serve 30+ months in Federal Prison.

Snipes appealed his conviction, but lost.  After his defeat it was clear that prison was the practical outcome.  Now, having been there personally, I have the deepest empathy for Wesley.  Prison time moves slowly.  The one that that is true is that it will give Snipes a new perspective and opportunity for self-reflection.

Likewise, on a practical note, I guarantee he will file and pay his taxes moving forward.  I know many men who were imprisoned for tax crimes including not filing and paying their taxes.  All, when released, had given up the hope that somehow they could avoid the IRS or Federal Government.  Personally, I don’t care about the argument related to taxes – rather I care about my freedom.

About the Prison – FCI McKean, PA

McKean is a medium security facility housing male inmates.  An adjacent satellite prison camp houses minimum security male offenders.

FCI McKean is located in northwest Pennsylvania between Bradford and Kane, Pennsylvania.  It is situated 90 miles south of Buffalo, New York, off Route 59; and approximately 1/4 mile east of the intersection of State Route 59 and U.S. Route 219.

Here are some other links for those who are just now catching up with this story:

https://chuckgallagher.wordpress.com/2008/04/24/wesley-snipes-big-day-sentencing-he-asks-for-a-slap-on-the-wrist/

https://chuckgallagher.wordpress.com/2008/04/24/wesley-snipes-to-prison-big-win-for-irs-comments-by-white-collar-crime-speaker-chuck-gallagher/

https://chuckgallagher.wordpress.com/2010/01/11/tough-guy-wesley-snipes-fighting-to-say-out-of-prison-doubt-hell-win-that-battle/

https://chuckgallagher.wordpress.com/2010/03/15/wesley-snipes-not-worried-about-prison-me-thinks-he-should-be/

https://chuckgallagher.wordpress.com/2010/07/17/as-predicted-wesley-snipes-faces-prison-court-rejects-appeal/

So here’s a question for readers – Do you think that Wesley Snipes has been treated fairly?  And if not, what do you think should have happened?

YOUR COMMENTS ARE WELCOME!

Wesley Snipes fighting to avoid Prison!

Convicted by obvious choices and now facing prison, Wesley Snipes – through his attorneys – are attempting one last legal maneuver.  But first, here’s a prior link that identifies Snipes actions and choices related to his tax issues.

https://chuckgallagher.wordpress.com/2008/04/15/wesley-snipes-this-is-taxing-my-brain-what-did-he-do-exactly/

According to the Associated Press:

Attorneys for Wesley Snipes say they want to question jurors who convicted the actor of tax-related charges to determine whether any had made up their minds about his guilt before trial.

The motion filed Friday in Florida federal court says that an unnamed juror sent Snipes’ attorney Daniel Meachum an e-mail claiming that three other jurors had presumed Snipe’s guilt.

The motion says that would violate Snipes’ constitutional right to a fair trial.

Snipes was convicted in 2008 of three misdemeanor counts of willful failure to file his income tax returns. The 47-year-old is free on an appeals bond. However, federal prosecutors in Florida have asked a judge to revoke the bond and order Snipes to begin serving a three-year sentence.

I’ve asked myself as I write this – if I were a juror would I have a preconceived notion of guilt or innocence?  Yes.  How could I not considering that Snipes didn’t file returns.  The other issues…well that’s debatable, but failure to file.  That’s irrefutable.  Next!

Wesley Snipes – Prosecutor says Go to Prison Now!

Free on bond pending his appeal…now the Prosecutor wants Wesley Snipes (who LOST that appeal) in the “big house” and NOW!

Last Friday July 16, officials in an Atlanta, Georgia appeals court upheld a judge’s decision to put Snipes behind bars for three years on federal tax charges.

No date for the Blade star’s surrender was discussed and the correctional facility where Snipes, who has been free on bail pending the outcome of the appeal, would serve his time hasn’t been revealed. Yesterday – Wednesday, July 21, prosecutors filed a motion opposing Snipes’ bail, stating, “There is no good reason to delay his surrender”.

The star’s attorney, Daniel Meachum, insists he will respond to the filed documents soon. A jury originally convicted Snipes on three misdemeanor counts of willful failure to file his income tax returns in 2008.

REALITY CHECK

Regardless of whether you feel that Snipes was treated fairly or not, he is going to prison.  And, from personal experience (I’ve been there – although not proud of it), I can say he won’t have fun.  But, I can’t see what the rush is all about.  As a matter of personal example, I was sentenced to a prison sentence in June of 1995 and ordered to report in October of 2005.  Snipes is not a flight risk, so the only reason for a rush is the Prosecutors impatience.

So…let me say to the Prosecutor – YOU WON…Give it a rest…let the system work.  Snipes will be incarcerated soon enough.  Don’t be greedy!

To everyone else…this BS about the tax system not being legal.  Bad argument and you will lose as well.  Prison sucks…so pay your taxes and enjoy life…cause life outside of prison is better than life in prison!

YOUR COMMENTS ARE WELCOME.

As predicted – Wesley Snipes faces PRISON! Court rejects appeal…

Every choice has a consequence and Wesley’s choices have landed him in prison.  Do I think the sentence is a bit harsh?  Yes.  But, Snipes did more – much more – than just fail to file returns.  Rather, Snipes elected through his choices to challenge the federal tax system.  HE LOST!

There is a message here.  Whether you believe in the system or not, if you challenge the system and don’t play by the rules – YOU WILL GO TO PRISON.  I know…I was there partially for a tax crime.

For more background on this story see these entries:

https://chuckgallagher.wordpress.com/2010/06/02/screwed-by-kenneth-starr-wesley-snipes-might-find-an-unexpected-benefit-from-his-loss-no-prison-time/

https://chuckgallagher.wordpress.com/2010/03/15/wesley-snipes-not-worried-about-prison-me-thinks-he-should-be/

https://chuckgallagher.wordpress.com/2010/01/18/nicolas-cage-vs-wesley-snipes-both-ran-afoul-of-the-irs-different-approaches-different-results/

https://chuckgallagher.wordpress.com/2010/01/11/tough-guy-wesley-snipes-fighting-to-say-out-of-prison-doubt-hell-win-that-battle/

Candidly it would have been a miracle for the courts to have come back with any other verdict.  A recent story on CNN is quoted as saying:

Federal prosecutors said Snipes 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 was in dispute.

Before the sentencing in 2008, 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,” Assistant U.S. Attorney Scotland Morris said at the time.

WHAT’S NEXT?

Snipes, now that the appeals courts has ruled, will be given a report date and location.  Likely, he will be sentenced to a minimum security prison and will soon find out that – even at a minimum security place – prison is still prison.  For those who call it “Club Fed” I would challenge you to try it.  Frankly, it sucks.

Snipes will be a celebrity behind prison walls, but soon will be treated like anyone else.  He is, after all, an actor.  His “tough guy” image is just an image and he will quickly learn that there are others who would easily take advantage of him.  Best advice…stay to himself and learn humility.

When location and time in announced…it will be reported.  Meanwhile, YOUR COMMENTS ARE WELCOME.

Screwed by Kenneth Starr – Wesley Snipes might find an unexpected benefit from his loss – NO PRISON TIME!

Smart man – Wesley Snipes – wasn’t so smart with his tax dodging that he avoided a lengthly prison sentence (which he is now appealing)…  But sometimes even some folks fall into dumb luck.  This may be the case for the actor – tax dodger – Wesley Snipes.

Go figure…  Facing three years in prison he just might win his appeal since one of the star (no pun intended) witnesses – Kenneth Starr – financial adviser to Mr. Snipes back in the ’90’s.  Kenneth I. Starr, who was arrested recently and charged with fraud and money laundering in federal court in New York, was Snipes’ financial advisor in the 1990s. Starr, a prosecution witness in Snipes’ 2008 tax-evasion trial, testified then that he told the movie star he needed to file tax returns, despite contrary advice the actor obtained from an anti-tax outfit.

Now, honestly, as a former CPA – Starr gave Snipes accurate and good advice.  But…Wesley Snipes is hoping that the arrest of his former financial advisor could help reverse the actor’s tax-charge conviction on which he has been sentenced to three years in prison.

The testimony by Starr, described by the prosecutor in his closing statement as “a competent tax professional,” was a major reason the jury convicted Snipes on three misdemeanor charges, said Robert Barnes, Snipes’ lead trial lawyer. His client was acquitted of felony charges in the case.  Barnes said he was confident the conviction would be overturned now that Starr had been arrested.

Starr “a competent tax professional” is now being discredited because of the Ponzi scheme he effected which, by the way, apparently cost Snipes some dollars.  Better lose money than time in prison.

Frankly, this is all a bit surreal, in that I, too, was a “competent tax professional” who (UNFORTUNATELY) effected a Ponzi scheme (back in the ’80’s) before it was the popular sheik thing to do.  But, when you do something wrong – and face conviction for the offense – it seems your credibility is destroyed and success of the past is surely in the past.

“Wes will pursue all legal remedies if the government doesn’t step up to the plate and drop these charges on its own,” said Barnes, who is with the Bernhoft Law Firm in Los Angeles.

A spokesman for the U.S. attorney’s office in Florida that prosecuted Snipes declined to comment on Starr’s arrest and said the government still intended to contest Snipes’ previously filed appeal.  But some legal experts said Starr’s arrest could benefit Snipes, who has not yet begun serving his sentence.

“It’s a nice thing to have landed in the laps of the defense,” said Ellen S. Podgor, a law professor at Stetson University who blogged on Snipes’ trial. “If this was in fact the star witness, and if the guy lied, then that’s pretty crucial.”

During the trial the defense contended that Starr had lied on the stand.

If Wesley Snipes gets off it will be a blow to the government and bolster the ranks of those who somehow feel that not paying or filing tax returns is actually OK.  Take it from one who spent time in prison for a tax crime – playing with the tax law is not a wise move.  Should Wesley face three years in prison for a misdemeanor?  Seems a bit of a stretch, but, for those who followed this case, Wesley did much more than not file returns…he tried to dodge the system entirely and was not nearly as dumb as he played himself to be.

But Starr’s failure might keep this star out of prison.  I’m sure that Wesley is thanking his lucky Starrs that this fell into his lap!

Wesley Snipes tax appeal not worried about Prison – Me thinks he should be…

Starpulse reports Wesley Snipes is confident an appeals judge will overturn his conviction and sentence on federal tax charges, insisting he’s “not worried” about the case.  The Blade star was sentenced to three years in prison in 2008 after being found guilty of three misdemeanor counts of willful failure to file his income tax return.

NOT WORRIED…  Well, hate to share with Mr. Snipes, but the only way the IRS and Federal Government can cause folks file their tax returns and be (somewhat) honest in doing it is to put people in prison who don’t.

Prosecutors claimed he earned more than $38 million between 1999 and 2001 and owed $2.7 million in back taxes. Snipes apologized for his behavior during the trial, insisting he was “unschooled in the science of law and finance,” and contested the ruling in the Georgia Court of Appeals last November.

Unschooled…come on Wesley.  He was schooled all right.  In fact, his teachers taught that compliance with federal tax law was unconstitutional and he didn’t have a responsibility to report, file or pay.  Oh, but when his teachers were sentenced to prison and found guilty of felony crimes, Wesley decided it was time to play stupid and apologize.  Can’t say that an appeals court will give much sympathy to that.

In the appeal documents, his attorney accused prosecutors of seeking to make an example out of the actor, insisting the sentence “focused too heavily on deterrence.”

Snipes has been free on bail pending the outcome of the appeal, but he’s not concerned about his ongoing legal problems. He says, “I wouldn’t say I’m worried about it; I’m aware of it. All things fall as they should. At I’m at great peace with how I live my life and the blessings that the Lord has bestowed upon me.”

And Snipes is sure he will emerge victorious once a decision is made on his appeal. He adds, “Absolutely, we’re gonna win this!”

WIN THIS he says.  If he does then God help the IRS and compliance with the tax law…cause Wesley will set the example for tax patriots to test the system of voluntary compliance.

Nicolas Cage vs. Wesley Snipes – Both ran afoul of the IRS – Different approaches Different results

Having had issues with the IRS myself…I can appreciate what’s involved when trying to resolve them.  And, I’m not lost to the fact that the IRS issues with Snipes was different than Cage’s issues.  But, it’s interesting to see how the two dealt with the IRS.

Per an interview with People –

While the government recently placed a tax lien on his real-estate holdings, including an additional $6.7 million from 2008, “over the course of my career I have paid at least $70 million in taxes, unfortunately, due to a recent legal situation, another approximate $14 million is owed to the IRS,” Cage told PEOPLE in an exclusive statement.

“However, I am under new business management and am happy to say that I am current for 2009, all taxes will be paid including any to be determined state taxes.”

Reported on back in October 2009, Cage owed more than $70,190 on his 2002 taxes, $179,738 for 2003, $110,617 for 2004 and a whopping $6,257,005 for 2007.

One could assume that such a liability could bring on a world of trouble from the IRS, yet, we hear little of that.  Rather, it appears that the IRS is interested in one thing – getting it’s money.

The opposite seems true when it comes to actor Wesley Snipes.  Wesley Snipes was charged with failure to file tax retures for years of 1999 thru 2004. Not even with his fancy expensive lawyers did the famous actor get away with it.  Rather, Wesley Snipes received the maximum penalty for not filing his tax return – 3 years.  While some think Snipes was railroaded, most of us know that Snipes was fighting an unwinable fight.

Go figure…now Snipes is trying hard to stay out of prison.  Guess he’s not as tough as he would like you to think when he’s acting in the movies.

Now – having spent time in prison for tax evasion (not something I’m proud of – but a fact nonetheless) I know what can get you in trouble with that branch of the government.  For information about my past visit here.

From Black Voices – Here are 4 things that can increase your likelihood of being audited by the IRS:

1) Having an income that is greater than $50,000 per year – When you make the cheese, you become a big fish and worth the time to audit. The IRS doesn’t have time to go after little wallets.

2) You are self-employed – Statistics show that self-employed people tend to do the most wiggling and fudging on their taxes, so having your own business flags you as an audit risk.

3) Making a mistake on prior tax returns – if you’ve made mistakes in the past, you are likely to make another one…at least more likely than everyone else. This will flag your return for a possible audit.

4) An excessive number of tax write-offs – if the dollar value of your deductions exceeds a certain percentage of your income, then the IRS may come after you. Make sure that any write-offs you have are well documented and legal. You don’t want to cheat on your taxes or get too greedy when filing.

Remember that tax problems can happen to anyone, so if you are subjected to an audit, don’t panic. Go buy a book on dealing with audits, “fess up,” pay your fine and go on with your life.

YOUR COMMENTS ARE WELCOME!

Mark Ellis, head of Indiginet Inc., Pleads GUILTY to Tax Fraud – Prison in his future?

It’s that time of year when folks begin to receive their W-2’s and organize or re-organize their data for the preparation of their tax returns – TAX SEASON.  It’s also a time for the IRS and government to become active in their pursuit of those who feel that they are above the law – tax cheaters.  And, those who face the chilling grips of the IRS will find that there is little compassion given when it comes to punishment.  My guess is – that means prison for Mark Ellis.

Mark Thomas Ellis, president and CEO of Winsted Holdings, pleaded guilty to a tax charge in U.S. District Court in Los Angeles.

The company, which was known as Indiginet before Ellis bought control in 2003, sold billions of shares of nearly worthless penny stock in an environmental care company, broadband Internet service provider, and medical spa franchiser before the Securities and Exchange Commission stepped in. In the tax case, Ellis admitted to owing $750,000 to the Internal Revenue Service.

Ellis, of Long Beach, entered his guilty plea after previously being summoned to appear to answer charges that he subscribed to a false personal income tax return for the 2004 tax year. The allegations are contained in a criminal information filed by prosecutors last year.

According to his plea agreement, Ellis admitted that, in 2004, he received over $748,000 from the company for his own personal use, providing himself with compensation in addition to his salary that he used to pay for personal expenses and to invest in an unrelated business. In addition, Ellis admitted that he did not disclose to his accountant who prepared his tax return that he had received the additional income and compensation from the company.

Now…not disclosing is blatant tax fraud and something that doesn’t play well with federal prosecutors.

In his plea, Ellis admitted that he knew that his 2004 tax return was false and that it was illegal to file a false tax return with the IRS. Ellis stated that he knew that he had received the aforementioned income and that he failed to report it on his 2004 tax return.

In addition, Ellis acknowledged that he received additional payments totaling $1,497,537 from Indiginet or Universal Broadband Communications Inc. in 2003, 2005 and 2006. Ellis admitted that he deliberately failed to report these payments on his personal tax returns for the years indicated.

In total, Ellis received $2,246,271 that he did not report to the IRS for the years 2003 through 2006.  He agreed that the resulting tax loss to the government, due to his underreporting, amounts to over $725,000.  Ellis also agreed as a part of his plea that he is liable for the fraud penalty imposed by the IRS, which amounts to 75 percent of the tax due, on the amount of tax he owes to the government.  U.S. District Judge Terry J. Hatter ordered Ellis to appear for sentencing on April 19, 2010. When sentenced, Ellis faces up to three years in federal prison and fines totaling $100,000.

Now, unlike the case with actor Wesley Snipes where the failure to report and/or file was based on a weak argument that the tax law was unconstitutional, Ellis appears to have taken the position that he just didn’t want to pay and therefore didn’t report.

While I am not proud of the fact that I, too, spent time in federal prison for tax evasion (I failed to pay tax on embezzled money), I know that many were in prison for tax crimes.  In our system of ‘voluntary’ compliance – PRISON – is an important deterrent to encourage those who might attempt to thwart the system.  For that reason I fully suspect that Ellis will spend time in federal prison – and it’s not ‘Club Fed’.  I’ve been there I know!

Ellis will be sentenced April 19, 2010

YOUR COMMENTS ARE WELCOME!