Home—Blog—The biggest tax evaders ever
Jun 28, 2012, 11:30
Posted byMerryn Somerset Webb
Comments (22)
Good tax avoiders do pretty well in the UK. If you can get to be a non-dom, if you trust your spouse enough to let her move abroad with all your capital assets, or if you can really use tax havens properly, you can all but remove yourself from the tax system.
But while that’s mostly OK with the state, tax evasion isn’t. Given the seemingly endless confusion over what makes an evader and what makes an avoider (the first is illegal, the second is not) I’ve been wandering through the history of tax evasion and making a list for you of some of the biggest and best evaders ever.
It is, of course, only a partial list. That’s largely because it is very short, but also because it includes only the evaders that got caught and the ones I find interesting or amusing. Presumably the really good ones never got caught.
It also isn’t going to include the names of any of the best of the historical evaders. There was clearly a vast amount of tax evasion in Roman times, for example - the huge pile of coins unearthed in Jersey this week may well have been hidden to evade Caesar’s taxes. But so far I haven’t been able to attach any names to the evaders. Input from historians welcome.
The final thing to note on this little list is just how different the participants are: all they have in common is that they evaded taxes and probably ended up wishing they had not (I say probably because it doesn't seem to have made much odds to the Carters or to Hancock).
Helmsley was one of the most famous villains of the 'greed is good' boom of the 1980s. She worked her way up from her first job as a receptionist to one as a real estate broker by the early 1970s, something that, to some degree, at least means that we should admire her as a feminist icon of her age.
She also worked her way through two husbands before hitting the jackpot with hotel billionaire Harry Helmsley in 1972. She went on to become the star of the Helmsley marketing campaigns, appearing in endless ads guaranteeing a perfect stay for all guests. She wouldn’t tolerate skimpy towels or bad phones, she said, so “why should you?”
However, while she might have wanted the best for the guests, she wasn’t so keen on everyone else. She was famously unpleasant to staff (so much so that they set up an early warning system across the hotels to alert each other when she was seen to leave her apartment) and was obsessed with evading taxes.
She had jewellery purchases shipped out of town to avoid sales taxes; she charged her home renovations and personal purchases (everything from a $130,000 stereo system to her bras) to corporate accounts; and she told her housekeeper that “only the little people pay taxes”.
When she and her husband were charged on 235 counts of evasion, Harry was deemed unfit to stand trial (he was 80), so she stood alone. The trial cemented her reputation as the Queen of Mean (even her own lawyer called her a bitch) and ended with her serving 18 months in prison (something of a comedown given that her New York apartment alone stretched to 10,000 sq ft), and paying a fine of $7.1m.
She died in 2007, cutting her granddaughters out of her will and leaving $12m to her dog, Trouble. More on the story here.
Much of the nastiness in 1920s Chicago (there was a lot… ) was caused by just one gangster – Al Capone, a man who never made it to the end of the 6th grade (he was expelled from school at 14) but nonetheless controlled most of Chicago’s underworld by his mid 20s.
Under his rule the gambling, prostitution, liquor and extortion rackets across the city were brought together in one syndicate. The net effect was a vast income – something in the region of $100m in 1927 alone.
In 1931, despairing of getting him on anything else, the government indicted him for tax evasion. He was eventually found guilty on five counts and sentenced to 11 years in prison. He ended up in Alcatraz.
Anderson, a telecoms entrepreneur and fine art collector (he was a frequent visitor to Christie's in London) was arrested in 2005 in the biggest US tax evasion case ever.
He pleaded guilty, admitting to hiding $365m of income. In 1998 he admitted to earning $126m but declaring only $67,939 and paying only $495 in tax. In 2011 he was ordered to pay around $250,000,000 in tax and penalties. He is due to be released from prison at the end of this year.
You can see him being interviewed on CNBC – and protesting his innocence.
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I mention this one partly because I am very fond of Prussia Cove (being part Cornish) but also because smuggling is really nothing more than tax evasion. It might sound glamorous but all smugglers are doing what they do to avoid duties of one kind or another.
John Carter, fisherman, rogue and one of the biggest known smugglers of the 18th century, ran his operation out of a sheltered headland towards the bottom of the south coast of Cornwall, one he later named Prussia Cove (John styled himself the 'King of Prussia').
He and his brother Harry were said to have owned two large ships each with a crew of 30 plus small boats to bring their contraband onshore. Here you can see the tramlines cut into the rocks at the cove to get the carts up.
They appear to have been in regular battles with the man from the revenue who pursued their vessels and occasionally managed to confiscate their goods. After one such battle in 1788 Harry noted that "the bone of my nose was cut right in two and two very large cuts in my head that two or three pieces of my skull worked out afterwards".
There is no mention to be found of John post 1807, although Harry appears to have retired to a nearby farm to devote himself to his hobby (preaching). If you feel up to it, you can read his autobiography here. Otherwise you can become a smuggling expert with Richard Platt’s history of smuggling, Smugglers' Britain.
Still on the subject of smuggling, Boston-based Hancock is probably worth a mention. He inherited a profitable shipping business from his uncle in his 20s but was also but well known for making a new fortune smuggling goods into the US, becoming the richest man in New England by the mid 1700s and funnelling much of his wealth into advancing revolutionary causes.
He was charged with smuggling in 1768, but the charges were eventually dropped (there is an argument now between those who think he was a smuggler and those who swear he was not) and he went on to be one of Boston’s leaders during the American Revolution in 1775. He was later the first to sign the Declaration of Independence.
Just as Walter Anderson caused excitement in the US by evading the most tax ever, so the two Ahmeds did in the UK. In 2007 they were sentenced to seven years in prison each after a massive “missing trader” VAT scam dealing in the import and export of computer parts. They imported goods VAT-free and then exported them again while claiming back (unpaid) VAT. It sounds like a boring kind of a scam, but the profits were anything but.
The gang the two were part of owned two blocks of flats in Dubai (given what has happened to property prices since, this clearly wasn’t as clever as the original VAT fraud), a long list of luxury flats in the UK, and a horde of pricey cars.
They were ordered to pay back crime profits of £92.3m each (the largest ever UK confiscation order) by September 2010. They failed to do that, something that added another ten years to their sentences. They say they are penniless and cannot pay. The judge in the case says this is “frankly ludicrous”. They had a go at appealing. You can read all about that here.
There seems to be something about being a celebrity that invites people to evade tax – probably the fact that income that pours in from many sources is perceived to be less traceable than the income of your average PAYE earner.
There is little need for us to list celebrity dodgers here – a whole load of other websites have this end of things sown up. So those who want to know how US comedian Sinbad evaded taxes to the tune of over $8m and ended up bankrupt; how OJ Simpson was named by the California Franchise Board as a prolific tax dodger; how Willie Nelson ended up with a $16m bill for back taxes in 1990; or how Boris Becker attempted to evade $3m in back taxes by pretending to be living in Monaco when he was actually more often at home in Munich, should click here, here, or here.
More? Other stars that have ended up in tax trouble include Wesley Snipes, Nicholas Cage, Lauren Hill, Kerry Katona, Lester Piggott, Martha Stewart, Marc Anthony, Annie Leibovitz and Heidi Fleiss, to name but a very few. To that list you can also add almost all celebrities of any kind in Greece. They never expected to have to pay any tax. Now they've been named and shamed on the government's long, long list of well-known tax evaders.
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(28 June 2012, 11:51AM) Complain about this comment
Thank you for a very entertain article. I suppose it comes down to the contract between the state and the individual. The individual agrees to support the state by paying their fair share and being productive. The state defends the liberties of the individual and represents the interest of the individual.It would be good to see Mr Cameron expressing what he thinks are his obligations, as PM, to the UK citizen and not just those he thinks might vote for him.
(28 June 2012, 12:31PM) Complain about this comment
Excellent article Merryn. Part Cornish, but called Somerset need explaining. You could also have highlighted that several comedians over the years became tax evaders par excellence. Jimmy Carr is not alone alongside Ken Dodd ,Groucho Marx and the daddy of them all W C Fields who opened anything up to 2,000 bank accounts all over the US and abroad under assumed names like Theopilius FireFly. Urban legend says hick banks are still uncovering unclaimed monies that could have belonged to great curmudgeon.Oh and wouldn't those chasing the "King of Prussia Cove" be excise men rather than revenue?
(28 June 2012, 12:52PM) Complain about this comment
Tax evasion is one thing damaging to the state but is small fry compared to the damage done by treacherous politicians.Do these individuals REALLY care about being re-elected when they probably consider their future prosperities have been assured by payment in kind for services rendered to those most rewarded by 'legally' corrupted 'playing fields'?Insofar as those doing the rewarding are concerned, there now is only one Party - Liblabcon. Insofar as the electorate is concerned, there is now virtually no democracy, thanks to treacherous politicians!
(28 June 2012, 01:59PM) Complain about this comment
You forgot Marc Rich - the most successful commodity trader of all time.
(28 June 2012, 03:36PM) Complain about this comment
As for historical tax evaders, I'm not sure about Rome, but it was difficult for the rich to evade tax in Athens. The richest citizens each had to pay for a triereme (or in peacetime a theatre production - subsidised arts go back a long way). If they thought they weren't the richest, they had to say who they thought was richer than them. That person then had a choice - either pay for the triereme, or swap property. Probably works best in a society where pretty much all wealth is land...
(28 June 2012, 05:50PM) Complain about this comment
Some of the worst tax evaders were those who left our shores for the USA 300 years ago. Okay they contended with the delights of scalping and being shot with arrows but their fear of UK tax meant they balked at us even taxing their tea drinking.Wasn't Tiny Rowland quite good at not paying tax?
(29 June 2012, 03:18AM) Complain about this comment
I wonder if my position is fortuitous or immoral? I work in the middle east and pay no tax on my income. The income I derive from letting my house in the UK is within the personal allowance so I don't pay tax on that either. I am not liable for capital gains tax as I have been non-resident for tax purposes for 16 years. I can keep my savings offshore so no tax there. When I visit the UK (for less than 91 days per year), I take full advantage of the services provided by tax payers (roads etc), but I can reclain the VAT on most goods purchased whilst I am there. My income is relatively modest (I am teacher), so I am not making a fortune with these tax free advantages. However, is does seem rather bizarre.
(29 June 2012, 08:02AM) Complain about this comment
You're only entitled to personal allowance if you're a UK resident Phil, so unfortunately the house letting income pushes you into the immoral camp if no tax is being paid on it.Close call though!The VAT thing has always been a mystery, either value is added or it isn't, now we all know no value is added, yet for a non EU buyer the reclaimation of the added value adds value???As you say, bizarre.
(29 June 2012, 08:14AM) Complain about this comment
#11. Phil. You are not immoral.Your income is mainly earned overseas. It is modest and the fact that it is untaxed by the regime in which you earn it is reflected in its modesty. If it were taxed they would have to pay you more , the market would see to that. The bit you earn on your house is exempt under existing rules, claiming your VAT back is a bit inequituous. But you didn't make the rules. You are not actively seeking out schemes to avoid tax, just a victim of circumstance. Not feel guilty.You qualify as.... not worse than Jimmy Carr.
(29 June 2012, 09:36AM) Complain about this comment
#8 Dave. That is wrong. All nationals of EU and EEA nations such as Iceland,Switzerland etccan claim UK Personal allowances without being resident here. I assume with a name like Phil Taylor he is a UK or Irish national.
(29 June 2012, 09:38AM) Complain about this comment
Now there's a dilemma, we can't both be right, either Phil is entitled to personal allowances or he isn't.Actually we can, which goes a long way in supporting the view that the UK tax rules are complex, but as he had already said in his post he claimed personal allowances it was remiss of me to assume he hadn't submitted an election for the allowance or had chose to be taxed on a remittence basis.Fortuity wins the day Phil.Although Boris raised an interesting point about your salary needing to be higher if subjected to income tax, Ms Lagarde's salary was recently subject to the same debate and attracted the same defence, yet popular opinion definitely put her into the immoral camp. Sauce, goose and gander springs to mind or maybe it's a size thing........?
(29 June 2012, 09:43AM) Complain about this comment
#10 Sorry Boris I was busily scribbling away and missed your post, I'd fallen foul of forgetting the complexity of HMRC, you're right of course.A couple of odd exceptions on the list too......
(29 June 2012, 11:22AM) Complain about this comment
I think Ken Dodd invented the celebrity tax evasion court case. Bless 'im.
(29 June 2012, 03:05PM) Complain about this comment
Boris is right - UK non-residents are entitled to a personal allowance. No need to try and guess my origins - it's a pseudonym. I'm assuming yours is too Boris. Romford is also an unusual first name.
(29 June 2012, 04:23PM) Complain about this comment
It is unusual Phil, practically non-existent!I blame my Dad, he was a big Johnny Cash fan and knowing that he was going to be an absent Father he decided to shackle me with something that would toughen me up both mentally and physically to cope in later life with a tenuous association with TOWIE.
(29 June 2012, 07:49PM) Complain about this comment
#14 .You definitely won't make a tax evader if you can only come up with a pseudonym like Phil Taylor. See my earlier post about the whacky names used by W C Fields.
(29 June 2012, 09:04PM) Complain about this comment
what about the Vesteys ; even King George V thought their behavior abhorrent .http://www.guardian.co.uk/theguardian/1999/aug/11/features11.g2
(30 June 2012, 06:59PM) Complain about this comment
#2 Boris, Merryn is, of course, a Cornish name - St Merryn is about a mile west of Padstow. Merryn once let slip that her family lived in Langport so that may have some connection with the Somerset bit.As someone who lives near Prussia Cove and walks there most days I often wonder how the Carters got away with it for so long. But then plus ca change ....
(01 July 2012, 07:04PM) Complain about this comment
#18 Good point Mike and shame on me for not realising. I have proudly voted Mebyon Kernow in 3 of the last 4 elections.It is comforting to distance oneself from the Westminster chatterers and the mainstream that has badly failed us in recent years. Perhaps Cornwall will soon win some autonomy. First priority will be to tax the toffs in posh Rock and St Ives and get a modest revenge for having them dump on us for the last thirty years.
(01 July 2012, 07:06PM) Complain about this comment
Think I may have found the biggest ever tax evader. Pavorotti was 26 stone and had £50 million stashed in Switzerland.
(02 July 2012, 04:08PM) Complain about this comment
The more complex and higher the rates of tax the more people will seek (and have opportunity) to both avoid and evade as well as there being a significant disincentive to work. Of course some people will object to paying any tax - so with any simplification and lowering of tax rates would have to come stiffer penalties for people acting illegally.I think one of the biggest problems (lack of tax revenue) is people working for cash-in-hand. I'm sure there were a huge number of people (hypocrites) who were either claiming benefits they are not entitled to or accepting 'cash' (without paying the tax) that thought Mr. Carr was wrong to do what he was doing - despite the obvious irony that what he was doing being 'technically legal' and what they are doing 'clearly illegal'.I'm not siding with Mr. Carr but it's a fault of the tax system is what he was doing was legal.
(04 July 2012, 12:04AM) Complain about this comment
Why do I feel that the state thinks tax is a right. Tax and the newer invention VAT and in case of petrol paying tax on tax. Always blaming the Middle East for the price of petrol when the western tax on petrol is a multiple of what the Middle East ever earns from its oil. Tax is not a right it is something I would gladly pay in return for something. If my child wastes my money and demands more, then my answer might be NO. Attacking Mr Carr for peanuts when Mr Cameron's friend Mr Green legally pays no tax is immoral. Not only that but rewarded a knighthood is absurdity and shows in what world we live in when standards and morals are upside down. Western governments are getting very keen on finding every penny from every small individual shows the end of 500 years of looting from the poor, who are now wealthy and buying the west up. When the west can't loot the east, the west goes after it's citizens. I will always be happy to pay what I consider value for money, including tax.
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