Gary Kaplan thought he had his legal problems taken cared of when he settled with the US government for $44 million to go with a 51-month prison sentence for the illegal bookmaking, racketeering, mail fraud, and using wire communications charges filed against him in 2007. Turns out, his problems aren’t finished yet. Not by a long shot if the IRS has its way.
Shortly after his conviction, the founder of BetonSports was also assessed another steep bill by the US government after the IRS discovered that he didn’t file civil tax returns from 2004 to 2005. So the IRS flexed its proverbial muscle, slapping Kaplan with a $24 million fine to go with $12 million more in penalties.
Naturally, Kaplan contested that decision, arguing that as part of his settlement, no further charges could be brought against him, not to mention these IRS charges amounted to double jeopardy or preclusion by judicial estoppel. So the matter was taken up to the US Tax Court and last week, the court – finally – announced its decision.
No soup for you, Mr. Kaplan!
According to the court, Kaplan’s plea agreement also included a clause that essentially didn’t prohibit Uncle Sam from taking any “civil, civil tax, or administrative action against the taxpayer” and that the IRS’ beef with Kaplan was his failure to pay his civil taxes. Compounding Kaplan’s woes was his admission to the sentencing judge from his original case that he knew the difference between criminal and civil tax proceedings, meaning that whatever plea he agreed to during his criminal trial didn’t cover what would end up being a civil case filed against him by the IRS.
So Kaplan is shit out of luck against the US government – again. If it wasn’t enough that he had to give back $44 million, he’s got another $36 million tab to pay the US government. The question now is if he’ll acquiesce to the decision and fork over the money, or continue to keep his head tucked in the sand, and out of the public spotlight.
Nobody knows where he is, and at this point, you’re likely to find an easier time finding Waldo these days than you would Gary Kaplan, so how long that $36 million in civil tax penalties will be left unpaid is anyone’s guess at this point.