October 23, 2018

Report: Feds Examining Whether Michael Cohen Committed Tax Fraud

Federal prosecutors are already investigating possible crimes related to the business affairs of President Trump’s former personal attorney, fixer, and bulletproof vest, Michael Cohen, including bank fraud, campaign-finance violations, and hush payments made to cover up alleged flings Trump had with a porn star and a Playboy model. So, hey, why not throw tax fraud into the mix?

The Wall Street Journal reported on Aug. 7 that the feds are examining whether Cohen underreported income from his taxi-medallion business on federal tax returns. A source told the Journal that income included “hundreds of thousands of dollars received in cash and other payments over the last five years.”

As someone who was unfamiliar with the history of cabs in New York City, I had no idea how coveted taxi medallions are were, and Cohen has held numerous medallions in his portfolio. At one time, the limited number of medallions issued by the city made each one extremely valuable. As recent as four or five years ago, each medallion was estimated to be worth more than $1 million. But then Uber and Lyft happened, which drove down the demand for cabs—and medallions. Two medallions sold for less than $200,000 each earlier this year.

Then there’s this:

Meantime, federal prosecutors subpoenaed Mr. Cohen’s former accountant, Jeffrey A. Getzel, who was responsible for preparing many of Mr. Cohen’s financial statements submitted to banks, people familiar with the matter said. Mr. Getzel also served as an accountant for Evgeny “Gene” Freidman, a taxi-medallion manager who worked with Mr. Cohen, according to public court records. Mr. Freidman is cooperating with federal prosecutors in the investigation, according to people familiar with the matter.

Freidman, known in New York City as the “Taxi King” (I thought that was Louie De Palma?), pleaded guilty on May 22 to a single count of criminal tax fraud for evading $50,000 worth of taxes, even though he’s been accused of failing to pay $5 million in taxes.

Getzel, CPA, CFF, is managing partner of the Woodbury, NY-based firm Getzel Schiff & Pesce LLP, which specializes in forensic accounting. Among Getzel’s responsibilities are advising clients on “general business and tax-related matters, transaction structuring and financing alternatives, and long-range strategic planning,” according to his bio on the firm’s website.

Getzel could not be reached for comment by Going Concern.

Authorities are also looking into whether any bank employees allowed Cohen to obtain loans without adequate documentation, according to the WSJ:

In particular, federal investigators are looking closely at Mr. Cohen’s relationship with Sterling National Bank—which provided financing for Mr. Cohen’s taxi-medallion business—including whether Mr. Cohen inflated the value of any of his assets as collateral for loans, according to people familiar with the matter.

Cohen has yet to be charged with a crime and has denied any wrongdoing.

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Going Concern is Not Immune to the Michael Jackson Circus

1.michael_jackson_71246050015.jpgWe’ve been able to avoid the whole Michael Jackson debacle up until now. We couldn’t, in good blogging conscience, avoid this particular story.
The estate of Michael Jackson is probably going to have to turn over at least $80 million to the IRS and they get to cut the line right to the front to collect.
“As in a bankruptcy case, Jackson’s creditors will jockey for first crack at his fortune. But the estate’s initial obligation will be to pay the late star’s taxes, said Beth Kaufman, a Washington-based attorney specializing in estate tax issues. ‘There is no question that the U.S. government has first priority,’ she said.
Oh, and the Service is not going to take the royalty rights to She Loves You or I am the Walrus either:

To settle his tax bill, the executors of his estate may have to sell or borrow against lucrative but hard-to-value assets or ask the IRS for a multi-year extension. That could allow the estate to pay the tab over time with earnings from Jackson’s share in rights to songs by the Beatles and his own music — prized properties whose value will likely make the estate’s tax bill only bigger. “The government is not going to take a Beatles record as payment. They want to be paid in cash,” said Roy Kozupsky, a veteran estate lawyer in New York who has worked on behalf of several wealthy clients.

Reportedly, Jackson still made $40 million a year from his ownership of the recordings. This will no doubt make the calculation of the tax bill more complicated and thus, we’ll continue to be saturated with all the excruciating details about this story that we just don’t want to hear.
Death and taxes: Big IRS bill looms for MJ estate [AP via TaxProf Blog]

UBS Names Needed so We Can Pay for Healthcare Otherwise We’ll Have to Print More Money

obama_point.jpg“Rich people, I want your money.”
No, seriously. Hand it over.
We’ve covered the failure (so far) of the IRS to get UBS to name names on 52,000 Americans and we’ve heard some good suggestions but maybe chocolate isn’t what the Service is interested in.
The House passed a pricey healthcare proposal yesterday and B to the O wanted it to be “budget neutral” which means, “We’re in a deep hole you clowns. Don’t make it deeper.”
Charged with said task, they went to a cocktail party got to work and came up with a solution that they super-duper rich will foot the bill via taxes. That means, IRS, get your shit together, because Nancy Pelosi has had enough of rich people, that aren’t her, not paying their fair share of taxes. Swiss bank account holders beware, here are the gory details that you’ll be getting in on if your name gets dropped:

Under the $1.2 trillion plan passed by the Democratic-controlled House of Representatives, the wealthiest 1.2 percent of U.S. households would have to pay an additional $540 billion in taxes over the next 10 years via an income surtax of between 1 and 5.4 percent. For the super-elite, those in the top 10th of 1 percent (and presumably the type of taxpayers who have Swiss bank accounts), that works out to an additional $280,000 a year in taxes on an average annual income of $2.3 million a year, according to the Tax Policy Center.

So basically it looks as though the IRS needs to close the tax gap because…wait for it…there’s shit to pay for! We’re not slapping healthcare on the Federal Reserve credit card, no, no. Right here and now we start paying for stuff out of our own pockets. So get on these Swiss banks and get the names because they’re avoiding their patriotic duty.
Obama’s self-defeating war on the wealthy [James Pethokoukis/Reuters]