Hollywood, California - "Blade" star Wesley Snipes faces up to three years in prison and payment of over $13 million in back taxes after being convicted of three misdemeanor counts for failing to file a tax return over six years. However, that actually came as a relief to Snipes in the Florida courtroom when the verdict was unsealed Friday. The actor had been charged by the Internal Revenue Service with multiple felony counts related to a blatant tax avoidance scheme for which Snipes was the poster boy, that could have had the star of "White Men Can't Jump" playing his hoops in the exercise yard of a federal precision for the next 17 years. (use search box for HT's related Snipes stories)
Two of Snipes business associates, tried with him, were convicted of much more serious charges. His co-defendants, tax protester Eddie Ray Kahn and accountant Douglas P. Rosile, were convicted on felony counts of tax fraud and conspiracy. They both face long prison terms, repayment of taxes and fines. .
This marks an end to the highest profile tax case since Leona Helmsley, the wealthy widow of a New York hotel tycoon, was dubbed the queen of mean, after she famously said, "Only little people pay taxes." Snipes wasn't one of the little people. He didn't file from 1999 until 2005, during which time he earned about $35 million. IRS officials have said that this trial is meant as an important public statement that if you do not pay your taxes, you will face consequences. The verdict comes just as millions are preparing their taxes.
Snipes, who has been free on $1 million bond since returning to the U.S. last year from a movie shoot in Africa, had argued the IRS didn't have the right to tax him or even to investigate him. Yet somehow Snipes managed to convince the jury in Ocala that he had been the victim of bad advice, and not a conscious tax avoider.
Snipes attorney had argued that he was caught up in the scheme because he was a celebrity, and that he was the victim of "unscrupulous tax advice" by criminal conspirators Rosile and Kahn. Snipes claimed that he had tried to get the IRS to tell him what they wanted, but that the agency didn't respond.
"Disagreement with the IRS is not fraud of the IRS, is not deception," Snipes attorney had pleaded, according to Time Magazine. "It was an attempt to engage the IRS, to go through the IRS procedures and processes and see who's right."
Amazingly, the court bought that and dropped the felony charges.
The scheme to avoid taxes involved an obscure section of tax code which they interpreted to mean that tax is only owed if income is derived from a foreign corporation. That was what Snipes and his tax preparer, Rosile, claimed in 1997. As a result of not owing any taxes, Snipes claimed he should get a refund of $7.4 million tax refund.
There are a reported 400 others who took Rosile's advice as well, but the government went after Snipes because his was by far the largest. Snipes later claimed he was the victim of selective prosecution because of his celebrity and his race. Those claims did not hold up.
The end of this case marks another sad chapter in Snipes fall in a decade from one of Hollywood's most highly paid and sought after stars to a convicted tax evader. Snipes hit his peak in 1998 when he appeared in seven movies including the blockbuster hit "Blade," produced by his company, which grossed $150 million worldwide and led to two successful sequels. He regularly commanded a salary of up to $10 million per film, and co-starred along side of A-list stars. That was the year he got a star on the Hollywood Walk of Fame.
That was also around the same time Snipes, who is an expert martial artist, and his brother started the Royal Guard of Amen-Ra, a security firm that provided body guards. That company ran into problems however after it was linked to the United Nuwaubian Nation of Moors, a religious cult of African Americans with an anti-government philosophy that used Egyptian symbols. Snipes has used similar symbols to represent his businesses. He has also since distanced himself from the group in public.
Around 2000, Snipes met Kahn, founder of a tax protest group called American Rights Litigators. He later replaced that with Guiding Light of God Ministries. Both were found by the IRS to have been scams that were designed to avoid paying taxes. Kahn has claimed the government has no jurisdiction over him and refused to defend himself in court.
Rosile was a CPA in Florida and Ohio before being stripped of his licenses in the late 1990s. He is said to have been the tax preparer for Snipes and others counseled by Kahn. Rosile and Kahn split a portion of money from fraudulent tax claims that were successful.
When his federal indictment was first revealed, Snipes was on location in Namibia, on the southeast coast of Africa, making an indie action picture (described as a zombie western) called "Gallowwalker." When he did not immediately surrender there were rumors that Snipes was a fugitive and wouldn't come back. However, his attorneys opened negotiations with the IRS and he was offered a deal. Snipes did agree to return but later balked at the deal offered by the feds, and choose to go to this trial instead.
Snipes is also still involved in a lawsuit with New Line Cinema, which released all three of the "Blade" movies. He claims they did not pay him all of his $3.6 million salary, and that they cut him out of creative decisions even though he was credited as one of the producers. He also says they cut down his role in favor of two other actors in the movie, Jessica Biel and Ryan Reynolds. The third "Blade," with a gross of just over $50 million , was the least successful of the trilogy.
