Merryn's Blog

The biggest tax evaders ever

Tax evasion is nothing new, it's been going on as long as there have been taxes. Here's a list of some of history's worst evaders – or at least, those who got caught.

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.

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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.

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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).

Leona Helmsley

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.

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She died in 2007, cutting her granddaughters out of her will and leaving $12m to her dog, Trouble. More on the story here.

Al Capone

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.

Walter Anderson

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.

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You can see him being interviewed on CNBC and protesting his innocence.

The Carter Family of Prussia Cove

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".

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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.

John Hancock

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.

Syed and Shakeel Ahmed

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.

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An awful lot of celebrities

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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