Word: markowitz
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Dates: during 1980-1989
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...Markowitz, now 35, publicly admitted last week that the shelters were part of a colossal sham that authorities called "the largest tax-fraud case ever prosecuted." In a federal district court in Manhattan, he pleaded guilty to conducting a scheme that enabled about 200 taxpayers to take illegal income tax deductions amounting to more than $445 million. Allen, Cavett and the other celebrities who participated in the shelters were named as unwitting victims of the fraud...
...Markowitz recruited investors for several partnerships he set up to trade Government securities and other investments. For every dollar the partners put in, they took what they thought were legitimate tax deductions ranging from $4 to $10. The rationale for the deductions was that the partnerships suffered huge losses in their securities deals, which are perfectly legal tax write- offs. Government attorneys charge, however, that many of those transactions never took place, and that the losses occurred only on paper...
...graduate of M.I.T. and a for mer Merrill Lynch commodities trader, Markowitz set up his own offices in Washington, New York and Chicago during the early 1980s. A profile published in the Wall Street Journal said that associates described him as "a short, overweight young man who liked to wear jeans and deck shoes to the office and who didn't always pay attention to business details." His empire started to collapse in 1983, when the Internal Revenue Service became suspicious of his dealings...
...Markowitz faces a sentence of up to 16 years in prison and a $310,000 fine. In addition, he could owe as much as $4.5 million to the IRS. The Government has already moved to confiscate the racehorses, his Park Avenue apartment in New York City and his interest in the Washington Capitals...
Like many tax-shelter deals, Markowitz's scheme attracted money from wealthy celebrities, who often leave their financial affairs to lawyers or accountants. Some of the big names invested hundreds of thousands of dollars with Markowitz. They will not be prosecuted, said U.S. Attorney Rudolph Giuliani, because they "didn't know Markowitz directly and thought the transactions were legal." Having lost their investments, they face huge bills from the IRS for back taxes. Charges may eventually be filed against some accountants and advisers who steered the stars into the shelters...