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Up against the IRS, Snipes surrenders

December 09, 2006|Kim Christensen | Times Staff Writer

The last few years have not been kind to Wesley Snipes.

The actor lost his Florida home to foreclosure, was sued for $2 million by his own talent agencies and was named in a paternity suit by a woman who claimed she bore his son after having sex with him in a Chicago crack house.

Snipes said he didn't even know the woman and won the paternity suit when a DNA test proved he was not the father.

Now he faces a more daunting legal challenge. On Friday he surrendered in Orlando, Fla., on federal charges that he tried to collect $11.4 million in fraudulent income tax refunds and failed to file returns after 1998.

Indicted with two other men on Oct. 17, the star of the "Blade" trilogy, "Jungle Fever" and "New Jack City" faces up to 16 years in prison if convicted of all charges.

At his initial court appearance Friday in Ocala, Snipes pleaded not guilty and was released on a $1-million bond.

U.S. Magistrate Judge Gary R. Jones also granted Snipes, 44, permission to return to Namibia to finish filming "Gallow Walker," an independent production in which he plays a cowboy named Kaos. He must be back by Jan. 10 and surrender his passport, pending a trial scheduled for March.

Snipes, who had been out of reach for the IRS while in Africa, turned himself in after his representatives and federal officials negotiated his return, said Steve Cole, a U.S. attorney's spokesman in Tampa.

"He had a private jet and landed in Orlando, where IRS agents arrested him and transported him to Ocala," Cole said. "It was a prearranged arrest. We were there waiting on the tarmac."

In a recent e-mail to an Orlando newspaper columnist, the actor cast himself as a "scapegoat" and a victim of the public's appetite for "celebrities gone bad." He reiterated his innocence to reporters outside the courthouse Friday.

"I look forward to clearing my name and resolving this issue -- posthaste," Snipes said, maintaining that he had left for Namibia before the indictment came down and was never on the lam.

"I didn't flee," he said "I was already gone."

Defense attorney Billy Martin called Snipes "the victim of unscrupulous tax advice," signaling he would try to lay the blame on two other men charged in the case.

Co-starring with Snipes in the highly publicized tax drama are Eddie Ray Kahn, a veteran tax protester, and Douglas Rosile, who worked as an accountant despite the revocation of his CPA licenses in Ohio and Florida.

Six years ago, Snipes allegedly snubbed his longtime financial advisor and put his faith in Kahn, who founded the anti-tax group American Rights Litigators.

Touting it as "a professional organization that utilizes aggressive CPAs and attorneys," Kahn traveled the country, conducting seminars for people who paid $40 to learn his "proven techniques" for dealing with the IRS, according to court records.

"Do you FEAR the IRS?" blared a flier for one event, held at a Holiday Inn in Dayton, Ohio. "If you fear a Public Servant, then he is not your SERVANT ... he is your MASTER."

Kahn, who espoused an array of tax-avoidance strategies, was arrested Nov. 1 at Miami International Airport after Panamanian officials expelled him from the country in which he had lived for two years. He remains in custody.

Rosile turned himself in Oct. 17 and was released on his own recognizance after pleading not guilty. Neither could be reached for comment.

It's unclear how Snipes got involved with the pair, although all three apparently lived in central Florida at the time.

Kahn founded American Rights Litigators in 1996 in Mount Plymouth, Fla., and brought Rosile and others, including his wife, Kathleen "Kookie" Kahn, into the business.

The organization allegedly prepared fraudulent tax returns for as many as 4,000 clients nationwide who paid annual membership fees of $150, according to court documents. For an extra $69.95 a year, the records state, they could subscribe to the "Tax Truth Newsletter: Exposing the Deceptive Practices of the IRS."

Members also allegedly paid as much as $1,400 "for each abusive tax scheme provided," the indictment says, and turned over 20% of any refunds that resulted, with Kahn and Rosile splitting the proceeds.

Prosecutors say Snipes joined the group in March 2000 and shortly thereafter submitted the first of two amended returns that unsuccessfully sought multimillion-dollar refunds of previously paid taxes. He filed the second a year later.

The actor not only used Kahn's services, authorities say, but promoted them. In June 2000 he hosted one of Kahn's seminars at his home in California, where attendees were tutored in "fraudulent tax positions," the indictment states.

In addition to filing allegedly fraudulent returns for 1996 and 1997, Snipes is accused of submitting $14 million in fictitious "bills of exchange" as payment for unspecified taxes. The documents, which appeared to be genuine and bore watermarks and other security features, were nothing more than counterfeit checks, prosecutors allege.

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