“In May 2004, Plaintiff hired Ra Shonda Kay Marshall (“Marshall”) to 'assist [him] in budgeting [his] income and expenses and to provide bill payment services.' Marshall was previously employed at Omni Elite, a financial management firm in Ohio, where she had provided bill payment and other financial services to Plaintiff. However, she left the firm to work exclusively for Plaintiff. Upon hiring Marshall, Plaintiff signed a Power of Attorney giving her control over his funds and authority to file and pay taxes on his behalf.
Additionally, Plaintiff retained a tax accountant, David Krebs (“Krebs”) of CPA Advisory Group, Inc., 'to provide tax advice, to ensure tax returns were properly filed, and to confirm that [Plaintiff's] tax bills were paid on time.'”
Plaintiff is a recently retired major league baseball player who had a very successful career. Can you guess what happened next? I knew it as soon as I read the last sentence of the first quoted paragraph above:
“In late 2008, Plaintiff decided to mange his money himself and terminated Marshall. At this time, Plaintiff hired new tax advisors and also terminated Krebs. After terminating Marshall and Krebs, Plaintiff reviewed his bank statements for 2008 and realized that Marshall had embezzled millions of dollars from him and used his funds to pay her personal expenses.”
The above quotes are from an article posted July 15 at Forbes.com that quoted a federal court decision. No, the court decision wasn’t on the ballplayer’s claim for damages against the financial manager. It was on the ballplayer’s claim that he didn’t owe the government penalties for willful neglect. Seems that his adviser was too busy stealing his money to be bothered to file tax returns or pay income tax for him.
Now, this is different from the Wesley Snipes story. The ballplayer didn’t think that he didn’t have to file tax returns or pay income tax. He just thought it was ok to delegate that responsibility to someone else, then not bother to check to see if the other person was doing it. The court disagreed with the ballplayer’s argument that delegating the responsibility meant that he wasn’t responsible:
“….while Plaintiff signed a Power of Attorney giving authority to an agent and delegated his responsibility for tax liabilities to agents, he still maintained the ultimate responsibility for his tax liabilities, oversight of his agents, and the ultimate control over his taxpaying activities. Thus, the failure to file and pay taxes as a result of the embezzlement by Plaintiff’s agent which resulted in penalty assessments against him was not beyond Plaintiff’s control….”
You had to know the ballplayer was in trouble as soon as you knew that he gave his newly independent financial manager control of his money, including filing his tax returns and paying his taxes. He ended up owing the government over $1 million in penalties for late filing of his returns and late payment of the taxes, but that wasn’t the worst of it. The financial adviser stole from him to the tune of about $2.7 million.
The ballplayer sued the thief and got a judgment against her, of course, but I doubt he will ever collect. No word on whether the thief was prosecuted.
I also doubt that the ballplayer will ever again delegate the handling of his money to someone else and not bother to make sure that his tax returns were filed and the tax was paid.
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