With tax season in the air, tax evaders have been on ThinkAdvisor's mind. First we thought about the worst tax scams of 2013, and that got us thinking more broadly about politicians and other public servants.
Kwame Kilpatrick, the former of mayor of Detroit, ran into a boatload of trouble and faced charges including not paying his taxes. Other public servants, of course, have run into similar problems.
From a vice president (Spiro Agnew) to a sitting federal judge (Harry Claiborne) to a powerful U.S. representative (Charles Rangel), some apparently couldn’t avoid the temptation to line their pockets by cheating the IRS.
Still, the public can be forgiving, and some on our list managed to win re-election.
(Check out Top 9 Biggest Tax Scams of 2013 on ThinkAdvisor.)
Here are our 8 Public Servants Nailed for Tax Evasion.
1. Spiro Agnew, U.S. Vice President, 1969-73
Spiro Agnew was a lightning rod for controversy during his tenure in the Nixon administration. His hectoring of the left and the press with memorable phrases like “nattering nabobs of negativity” helped frame the upheaval over U.S. involvement in the Vietnam War. Supporters on the right, like speechwriter Patrick Buchanan, viewed Agnew as courageous, while those on the other end of the spectrum had a less favorable opinion.
In the end, scandal forced him to resign in a precursor to Watergate, which had not exploded onto the national scene. Agnew contended he was forced to resign by Nixon aides amidst an investigation into his activities while governor of Maryland in the mid-1960s. He discounted the 40 pages it took to lay out the bribery and tax charges against him. His downfall was capped by a plea of nolo contendere to one count of tax evasion for failing to report $29,000 of income in 1967. If he had managed to hang on to his job, he would have been in line to take over the presidency less than a year later when Richard Nixon resigned.
2. Harry Claiborne, Federal Judge, 1979-86
You might think that a judge would know better than to fail to pay his income taxes. Claiborne, appointed to the bench by President Jimmy Carter in 1979, was convicted of not paying $107,000 he owed the IRS on his 1979 and 1980 tax returns.
For his crimes, he became just the seventh federal official to lose his job through impeachment. He was also the first federal judge sent to prison, receiving a sentence of two years; he served 17 months. He maintained he had done nothing wrong and that someday the truth would come out. Maybe his work as a trial lawyer and hobnobbing with the likes of Frank Sinatra and Dean Martin swelled his head. Whatever the case, Claiborne’s career was in tatters and he committed suicide in 2004 while suffering from a number of ailments.
3. Randall ‘Duke’ Cunningham, U.S. Representative, 1991-2005
The California Republican’s exploits as a Navy fighter pilot during the Vietnam War helped win him eight terms in the House, where he took an interest in military affairs and espoused socially conservative positions. Sometimes his outbursts, like the time he said those fighting him “were the same ones who would put homos in the military,” drew attention. But what really put him in the national spotlight were charges of accepting bribes from defense firms to ensure they received government contracts. The bribes were considered the largest known to be accepted by a member of Congress and included a house, a Rolls-Royce and other perks.
Eventually, Cunningham was sentenced to more than eight years in prison in 2006 (he was released early last summer because of good behavior). He also was ordered to pay $1.8 million in back taxes and forfeit $1.85 million in bribes. The proceeds of the sale of a home were also turned over the government. Upon his release, Cunningham said he planned to write books and live near his mother in Arkansas or in Florida.
4. Thomas J. Lane, U.S. Representative, 1941-63
The details of the Massachusetts Democrat’s tax evasion case are mostly lost to history, but he did serve four months in prison for chiseling the government out of about $38,000 in taxes. Voters didn’t seem to mind. Lane was re-elected to three terms after he served his stint in the big house.
5. Larry Langford, Mayor of Birmingham, Ala., 2007-09
Langford’s stint as mayor was cut short when the SEC looked into corruption charges related to the building of a theme park while he was president of the Jefferson County Commission. That probe resulted in a 101-count indictment alleging bribery, wire fraud and tax evasion, among other charges. In 2009, he was convicted of 60 counts of the indictment, sentenced to 15 years in prison and fined nearly a quarter of a million dollars. The trial lasted a little over a week and jurors needed just two hours to return their verdict. He’ll have until 2023 to think about his misdeeds while he serves his term.
6. Charles Rangel, U.S. Representative, 1971-present
Power corrupts, Machiavelli wrote, and absolute power corrupts absolutely. Rangel represented a district in Harlem for decades, building a power base and rising to chairman of the House’s most powerful committee: Ways and Means. Then, in 2008, came allegations that Rangel had used his position to add millions of dollars from lobbyists and others to the coffers of the Charles B. Rangel Center for Public Service at the City College of New York. It was also said Rangel did not mention hundreds of thousands of dollars of income and assets on disclosure forms, nor did he pay required income taxes on a vacation home in the Dominican Republic.
Rangel was defiant even as he became the first representative in nearly three decades to be publicly censured on the floor of the House. He also lost his committee chairmanship, although that would have happened anyway when Republicans took control of the House. Still, Rangel never faced any charges in court and he was re-elected and continues to serve.
7. Walter R. Tucker III, U.S. Representative, 1992-95
The son of a former mayor of Compton, Calif., Tucker rolled to victory when he ran for Congress in 1992 gaining 86% of the vote. His mandate didn’t last long. Within 14 months he was under investigation for extortion and income tax evasion while he himself had served as mayor of Compton. Denying that he had ever sold out his constituents, Tucker resigned from Congress in December 1995 at the tender age of 38, and claimed the bribes he took were a case of entrapment. He was sentenced to 27 months in prison.
8. Catalina Vasquez Villalpando, U.S. Treasurer, 1989-1993
When your signature appears on all the paper currency printed by the U.S. Mint, citizens might naturally assume you have their best interests at heart. Villalpando was apparently more interested in her own money than worrying about her official duties. In 1994, about a year after her term ended when President George H.W. Bush left office, she was convicted of tax evasion, obstructing an independent counsel’s probe and other crimes.
She admitted failing to report about $167,000 in taxable income for 1989 and not paying $47,000 in taxes that would have been due the first year she served as treasurer. She pleaded guilty to three counts and received a sentence of four months in prison, three years of probation and only a $150 tax evasion fee. Prosecutors had sought a harsher penalty, which could have included a fine of $750,000 and 15 years in prison. Still, Villalpando was the first treasurer to serve time in prison.
Related stories on ThinkAdvisor:
- IRS’ Top 12 Tax Scams: 2014’s Dirty Dozen
- Top 9 Biggest Tax Scams of 2013
- How Lowering Taxes Drove Paper Millionaires to the Poorhouse
- 5 Commonly Overlooked Tax Planning Strategies