Manhattan Energy Investor takes a guilty Plea

Morris Zuckerman

According to the feds..."Preet Bharara, the United States Attorney for the Southern District of New York, announced that MORRIS E. ZUKERMAN, a Manhattan businessman who owns companies involved in energy investments, pled guilty today to charges detailing ZUKERMAN’s involvement in multi-year tax fraud schemes pursuant to which he evaded over $45 million in income taxes and other taxes.  ZUKERMAN entered his plea before U.S. District Judge Analisa Torres.

U.S. Attorney Preet Bharara said:  “As his admissions today made clear, Morris Zukerman took numerous pages from the tax evader’s playbook:  he illegally evaded tens of millions of dollars of corporate income taxes from the $130 million sale of an oil company; he prepared personal tax returns for himself and family members that falsely claimed millions of dollars in deductions; he evaded employment taxes for household employees; and he schemed to defraud and obstruct the IRS auditors who were examining his false tax returns.  After years of finding every way to avoid his tax obligations, Zukerman has finally been forced to admit to his criminal tax evasion.  I thank the New York Field Office of the Internal Revenue Service, Criminal Investigation Division, and the New York Office of the U.S. Postal Inspection Service for bringing Zukerman’s breathtaking tax fraud schemes to a just conclusion.”

According to the Indictment, today’s plea proceedings in Manhattan federal court, and other court filings related to this matter:

ZUKERMAN, the principal of M.E. Zukerman & Co. (“MEZCO”), an investment firm located in Manhattan, schemed to evade taxes based on income received from the January 2008 sale of a petroleum products company (the “Oil Company”) he co-owned (through a MEZCO subsidiary) with a public company.  ZUKERMAN schemed to evade the reporting of the sale – which resulted in the receipt by the MEZCO subsidiary of $130 million in gross sales proceeds – by falsely telling his accountants in mid-2008 that he had transferred ownership of the MEZCO subsidiary to a family trust in early 2007.  In support of the story he gave to the accountants, ZUKERMAN created backdated documents such as promissory notes and a board resolution purporting to show the transfer of the subsidiary to his family trust in 2007.  The false documents allowed ZUKERMAN to remove the MEZCO subsidiary from the consolidated tax reporting being handled by the accountants for MEZCO and thereby evade the reporting to the IRS of the sale of the Oil Company, as well as the payment of over $35 million in corporate income taxes.

Following the sale of the Oil Company, ZUKERMAN transferred the proceeds of the sale from the MEZCO subsidiary to his family trust and various corporations he controlled, including a company called Zukerman Investments.  Between 2008 and 2013, ZUKERMAN directed that over $50 million of the funds transferred to Zukerman Investments be used to purchase paintings by European artists from the 15ththrough the 19th centuries (the “Old Master paintings”), which ZUKERMAN used to decorate his Upper East Side apartment and the apartments of two family members – Family Member-1 and Family Member-2. 

ZUKERMAN schemed to evade personal income taxes and to obstruct the IRS by (i) causing various tax return preparers to prepare U.S. Individual Income Tax Returns for ZUKERMAN and his wife, and for Family Member-1, Family Member-2, and Family Member-3, that claimed, in the aggregate, millions of dollars of false and fraudulent deductions and expenses, such as phony charitable contributions and investment interest expenses; (ii) diverting, for personal use, corporate assets from MEZCO and other corporate entities ZUKERMAN controlled by directing that hundreds of thousands of dollars of fees be paid between 2007 and 2013 to Family Member-1, Family Member-2, and Family Member-3, for which the family members performed little or no work; (iii) directing that corporate funds be used to pay compensation to, and health care insurance for, a household employee of ZUKERMAN, whom ZUKERMAN also caused to be falsely identified as a MEZCO employee to ZUKERMAN’s corporate health care provider when, in truth and in fact, the household employee worked exclusively out of ZUKERMAN’s homes in New York City and in Maine as a domestic employee; (iv) falsely under-reporting employment taxes through the payment of hundreds of thousands of dollars of cash and other wages to ZUKERMAN’s domestic employees; and (v) providing false information to the IRS during audits in an attempt to fraudulently convince IRS auditors and other IRS employees that the fraudulent claims made on his previously filed tax returns were accurate when, in truth, they were not.   "

I wonder who tipped off the government against this character. I did not realize people were so filthy rich and still trying to rip off the government.   Remember, no gaps or gowns in prison. 

If he gets prison time, this is what he can expect...https://www.amazon.com/PRISON-expect-Federal-Bureau-Prisons-ebook/dp/B011GTWLOG