Pay Yo Fare, Wesley

Actor Snipes faces indictment on tax fraud charges
Prosecutors file 8 counts accusing him of nearly $12M in tax evasion

By Greg Farrell
USA TODAY

This is one “bad guy” role that Wesley Snipes doesn't want. In a federal indictment unsealed Tuesday, prosecutors hit Snipes, the prolific actor and movie producer, with eight counts of tax fraud.

According to the indictment, Snipes allegedly not only avoided paying millions in income taxes from 1999 through 2004, but he fraudulently tried to get an $11 million refund for taxes paid in the 1990s.

Prosecutors also filed charges against two Florida men who acted as tax advisers to Snipes, Eddie Ray Kahn and Douglas Rosile.

Snipes, who used to have a residence near Orlando, has starred in nearly 50 movies including White Men Can't Jump, New Jack City and the highly successful Blade series. But he reportedly also has run into a series of financial and legal difficulties. In this case, prosecutors allege that Kahn and Rosile convinced Snipes that under an unusual interpretation of federal law, known as the “861 argument,” only income derived from foreign-based activities was taxable. A U.S. court has never supported the argument.

Kahn founded a group known as American Rights Litigators and Guiding Light of God Ministries. Although GLGM described itself as a “Christian ministry and organization established to assist men and women in their pursuit of truth and freedom as Americans,” the government alleges GLGM is a for-profit operation that sells fraudulent tax schemes. According to the indictment, Snipes paid Kahn a consulting fee and paid to become a member of his American Rights Litigators group.

Rosile, an accountant whose CPA licenses to practice in Ohio and Florida were revoked, worked with Kahn to file tax returns for GLGM clients to claim refunds based on the “861 argument.” According to the indictment, if the government refunded money based on the “861” theory, Kahn would take 20% of the refund and pay half to Rosile.

Despite warnings from previous tax advisers that his movie-related income was taxable and the “861” scheme was bogus, Snipes apparently sided with Kahn and Rosile in 2000 and stopped paying income taxes, the indictment says. Using the “861 argument,” Snipes tried to recover $4 million in taxes paid for 1996 and $7 million for 1997. The government also claims that Snipes tried to pay some of his income taxes from 2000 to 2002 by sending $14 million in bogus checks to the U.S. Treasury.

Paul Perez, the U.S. Attorney in Tampa who filed the charges, said in a statement: “Those who intentionally and unlawfully harass the IRS through deceit, trickery and fraud undermine the collection of revenue that is vital to every aspect of the operation of our government.” The Associated Press reported that Perez said Snipes has not been arrested because authorities don't know his whereabouts. Two of the charges that Snipes faces each carry a maximum sentence of five years. The remaining six charges carry up to one year each.

A spokesman for Snipes could not be reached for comment. Kahn and Rosile also could not be reached.