Ulrich “Uli” Hoeness (62) is arguably Germany’s most famous and revered sports figure. Which is why Germans everywhere were so shocked and dismayed yesterday when he admitted in court that he’s an even bigger tax cheat than fellow German Peter Graf.
Graf, of course, was world famous for being Steffi’s father, coach, and manager. As such, he helped her win more Grand Slams (22) than any other Tennis player (woman or man) in the Open Era and earn enough to become one of the wealthiest players in history. Alas, he was never more famous than when German prosecutors convicted him in 1997 for evading over $7 million in taxes on her earnings and sentenced him to three years in prison. He died in virtual obscurity and lasting ignominy just months ago.
Remarkably, prosecutors charged Hoeness of evading a similar amount, but he admitted to nearly four times that, namely, $25 million. There might have been some perverse pride involved, but he clearly hoped doing so would induce the court to be lenient with him.
I evaded taxes. I’m aware that reporting myself doesn’t change anything.
I deeply regret my wrongdoing.
(Daily Mail, March 10, 2014)
Except that his admission made the prosecutors look like incompetent fools. After all, they based their charge on an exhaustive investigation, which included a raid on his home and his proffer (as a sign of good faith) on the amount of his tax evasion. Now he shows up in court and admits that his proffer to them was false or at the very least … evasive?
It’s no wonder they’re insisting his sentence includes prison time commensurate with his crime.
[Hoeness] reported himself to authorities in early 2013, and part of the trial will be to determine whether he did that because he had become aware there was an investigation against him or for other reasons, which will affect the sentence he receives. If found guilty he faces anything from a fine to 10 years in prison.
No pleas are entered in the German system.
(Huffington Post, March 10, 2014)
To appreciate the impact of these developments it might be helpful to know that Soccer is to Germany as Basketball is to the United States. And Hoeness was as good a Soccer player and remained as revered a public figure there (as general manager of the Bundesliga’s Bayern Munich) as Larry Bird was a Basketball player and remains a revered public figure here (as president of the NBA’s Indiana Pacers). Imagine the public interest, shock, and dismay if Bird were in a similar predicament.
No doubt these German prosecutors are now anticipating, quite reasonably, that making an example of Hoeness will compel even more tax cheats to come clean – in a more timely manner pursuant to the country’s tax amnesty law – to avoid his fate.
The German taxpayers association said that more than 55,000 tax evaders have turned themselves in over the last four years, many in the last year, and paid a total of about €3.5billion in back taxes…
The case against Hoeness, and other celebrities caught or confessing to tax evasion, led thousands to preemptively pay back taxes in the hope of avoiding prosecution, and helped change the public’s perception of tax evasion as a misdemeanour to it being seen as a serious crime.
(Daily Mail, March 10, 2014)
Interestingly enough, the United States is forcing thousands of American tax cheats to preemptively pay back taxes by going after the Swiss and other offshore bankers who have been facilitating their cheating; not least because these bankers are giving up names to save their own hides:
At times, a Senate report into how Credit Suisse, a bank based in Zurich, helped its American customers hide billions of dollars of assets from the United States Treasury reads more like a John Grisham novel than a white paper…
‘The prospect of U.S. prosecution has been forceful enough to cause 43,000 taxpayers to self-report and pay nearly $6 billion in taxes and penalties,’ a Justice Department spokeswoman said. ‘Since 2009, the department has publicly charged 73 account holders and 35 bankers and advisers with offenses related to offshore tax evasion.’
(New York Times, February 25, 2014)
Still, the IRS would do well to haul more celebrity tax cheats into court, the way German authorities are doing with Hoeness. After all, apart from hotelier Leona Hemsley way back in 1989, the only other such person who comes to mind is actor Wesley Snipes in 2010. But he was more of a tax fool than a tax cheat who bought into the anarchic notion that the U.S. government has no authority to tax him.
What’s more, far too many celebrity tax cheats, like Nicolas Cage and Willie Nelson, get away with paying a fine (albeit in some cases quite an exorbitant one) but doing no time.
The three months Lauren Hill spent at a Club Fed last year (for failing to pay $1 million over 10 years) hardly counts. Especially given that thousands of Americans, including Wall Street traders, lawyers, doctors, and dentists, evade that much on income from offshore bank accounts every year:
Tax haven use costs the U.S. government $150 billion per year.
(U.S. PIRG, April 2013)
But let me hasten to add that far too little is made in the media about how American bankers do for foreign tax cheats, including despots and drug dealers, what Swiss bankers do for American tax cheats. Therefore, foreign governments could be forgiven for demanding more compliance from the United States before they comply with the Foreign Account Tax Compliance Act of 2010, which requires foreign banks to report to the IRS funds held by their American customers.
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