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2011 marks the first year that baby boomers turn 65. This means there will be a dramatic increase in the number of seniors in the years to come, making it extra important to raise awareness and help families protect against financial exploitation.
Andrew Mayoras recently discussed this topic, featuring some prevention tips on Forbes.com. Of course, discussions of a few celebrity cases are included, such as Wesley Snipes, Anna Nicole Smith, and Farrah Fawcett.
A federal judge has decided that it's time for actor Wesley Snipes to begin serving three years in jail, which he had been sentenced to two and a half years ago. The star of such films as Blade, White Men Can't Jump, and U.S. Marshals was convicted of three misdemeanor sentences for willful tax evasion on May 1, 2008. After pursuing appeals (which failed) Snipes has been free on bail, but that now has come to end.
The Judge ruled:
The Defendant Snipes had a fair trial; he has had a full, fair and thorough review of his conviction and sentence by the Court of Appeals; and he has had a full, fair, and thorough review of his presents claims, during all of which he has remained at liberty. The time has come for the judgment to be enforced.
In my Michigan probate litigation practice, I see many instances of scams and exploitation of seniors. I've been working on a new case involving a "pure trust". Normally, I'm all in favor of trusts. That is, legitimate trusts, such as the revocable living trusts that most reputable estate planning attorneys use.
Any trusts offered by a company rather than a lawyer should questioned right off the bat. For example, I previously posted an article about "trust kits"and why they are dangerous. Pure trusts, sometimes known as "common law trusts" or "constitutional trusts", are even worse.
Since the early 1990's, unscrupulous companies have been peddling these documents to help people place assets into what they describe as separate legal entities that are outside of the jurisdiction of the United States. Why would that interest people? Taxes. You transfer your assets into these pure trusts, the sales pitch goes, and boom -- no more taxes!
Sound too good to be true? It is. The IRS has been cracking down on pure trust companies, such as Commonwealth Trust Company, prosecuting everyone involved for tax evasion and fraud. Many of those involved (at least the ones who could be found) have received lengthy jail sentences.
Companies like this prey on the seniors and other vulnerable, trusting adults with seminars and other sales efforts that sound legitimate. They promise that there is legal precedence that pure trusts work. Many unsuspecting elderly adults, and others, plop down thousands, transfer their investments, and then stop paying taxes. And yes, customers have been prosecuted, convicted and sentenced, along with principals.
And if the risk of jail time wasn't enough, there's more. Those who invest money into these products lose control. That means their money can be placed into shady offshore investments -- or even worse, outright stolen. And seniors are a prime target because they considered easier to dupe.
So how exactly does Wesley Snipes fit into all this? It seems he was a big proponent of pure trusts. The IRS alleged he intentionally failed to file tax returns and committed fraud. While Snipes proclaimed his innocence, the federal government had evidence he hosted a seminars for companies that sold these and tried to convince others to become their clients and stop paying taxes.
Snipes was tried by a jury in 2008. He was found guilty of three counts of failing to file tax returns and pay taxes. He was sentenced to 36 months in jail (the maximum sentence) and ordered to pay restitution in the amount of $17 million, plus interest and penalties.