Investment banker Richard Josephberg, once a securities analyst at Goldman Sachs, apparently thought he'd figured out how to have his millions and hide them, too. First, he engaged in various tax shelters in the tax shelter boom of the late seventies and early eighties, promoting shelters through the Cralin Group til 1985 that resulted in more than one hundred million dollars of bogus losses being claimed by tax shelter investors (including, apparently, Josephberg and his Cralin partners). The IRS claimed that Josephberg earned about $3 million in fee income and paid only about 1% of that amount in taxes, so it assessed Josephberg for $1.5 million in deficiencies. Then, while continuing to make millions between 1995 and 2004, Josephberg thought he'd shelter his income again--what better way, he apparently thought, to avoid payment on old tax liabilities. Those shelters involved nominee accounts under other people's names (including an infant) with control retained for himself, use of various corporate and partnership entities for personal expenditures, failing to file tax returns, and false claims about big losses. All this is spelled out in the US Attorney's release about Josephberg's conviction yesterday (April 19, 2007) in White Plains on 17 counts of tax evasion. Download josephberg22_convicted.DOJ release.pdf See also the indictment. Download JOSEPHBERGindSUP2.indictment.pdf
Sentencing is scheduled for July 19. 59-year old Josephberg faces the possibility of years in prison.
Why is it that people who are making millions still think they "deserve" to pay less in taxes than is due? We need to ask ourselves whether the anti-government and anti-tax rhetoric pushed by libertarian and so-called "free market" groups over the last few decades isn't doing considerable harm to the fiber of our society. Isn't it time we acknowledge the importance of a sustainable tax system and put that priority right alongside all the "economic incentive" arguments that lopsidedly favor capital owners over workers, and multinationals over domestic industries?
Aside: And along with that, shouldn't we include in our discussions an acknowledgement of the problems that result when globalized corporations and their owners and managers so dominate the discussion that we disregard their lack of any loyalty to nation as well as the harmful effects of a focus on selfish individual wealth maximization as the only creed worth paying attention to? See, e.g., Timmons, Harvard's Former Lightening Rod is a Hit in Asia (New York Times April 19, 2007) (discussing Summer's views on the problems of the US current account trade deficit and the possibilities of global recession); Greenhouse, Steelworkers and British Unions Seek Merger, New York Times April 19, 2007).
“Multinational companies are pushing down wages and conditions for workers the world over by playing one national work force off against another,” said Derek Simpson, the general secretary of Amicus. “The only beneficiaries of globalization are the exploiters of working people, and the only way working people can resist this is to band together.” Id.
Tax fraud is a serious crime that undermines the entire tax system. It cannot be tolerated, and tax practitioners, CPAs and others involved in helping taxpayers prepare their returns and plan their transactions for efficient tax outcomes need to keep in mind that there is a line they must not cross between reasonable tax planning and illegal tax evasion. One good thing coming out of the recent visible pursuit of enforcement against powerful figures from the financial, legal and accounting world--like those at Brown & Wood and KPMG who promoted tax shelters and people like Josephberg who both promoted and took advantage of them-- is that people will see visible evidence that wealth does not ensure a protected position above the law.
Revised 4/20/07 3:30 pm
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