Harry Margolis
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| Harry Margolis | |
|---|---|
| Born | November 17, 1919 California, United States |
| Died | July 1987 Saratoga, Santa Clara, California |
| Occupation | Tax Attorney, Hollywood Celebrities Tax Attorney, Erhard Seminars Training Tax Attorney, Werner Erhard and Associates |
Harry Margolis (November 17, 1919 - July 1987)[1]was a Saratoga, California tax attorney. He represented Werner Erhard, and his various organizations, including Erhard Seminars Training, since 1971. Margolis practiced law since 1943, and began his career in a small firm in San Francisco, in its financial district downtown.[2]
Contents |
[edit] "Margolis Schemes"
Harry Margolis is known for his various "Margolis schemes"[3]which were various tax evasion schemes that failed during the 1980s. They focused on "transfer pricing schemes."
These schemes are known by a variety of names, in the U.S. they are called "transfer pricing schemes" and offshore they are called "reinvoicing structures". Sometimes they are called "Margolis schemes" because of the late California tax attorney Harry Margolis who created hundreds of these schemes (nearly all of which failed) in the 1980s.[4]
[edit] Opinion, United States Court of Appeals
In the court case Jerome Goldberg and Marjorie Goldberg v. United States of America, May 14, 1986 in the United States Court of Appeals for the Ninth Circuit, the court commented on the actions of Harry Margolis:
The district court concluded that because Margolis was "so inextricably entwined in this transaction", his practices were relevant to the determination of whether the transactions involved in this case were shams. The court stated that Margolis transactions are characterized by convoluted transfers of overvalued property rights, circular money movements among foreign trusts, delayed drafting, signing and backdating of documents, and client oblivion to the financial realities of their investments. Obfuscation of the facts behind offshore trusts is Margolis' primary shield from taxation. The contrived nature of his schemes has been succinctly described as a "labyrinthian design of tax avoidance . . . and a concomitant hopelessness from the beginning of any economic benefit or effect, other than tax reduction . . ." (citations omitted).
The court went on to state that
Margolis transactions constitute financial gymnastics, devoid of economic substance. Margolis clients typically purchase highly inflated investments and tax shelters, oblivious of the economics of the investment. Indeed, proclaimed ignorance of the facts is a hallmark of Margolis clients. Even so, their ignorance is explained by the fact that there is no economic risk, since the transactions often are not legally binding, but shams. (citations omitted).[5]
[edit] Dealings with Erhard Seminars Training
Harry Margolis served Werner Erhard as chief counsel and personal attorney (in addition to Art Schreiber), and was responsible for the creation and tax maintenance of his many complex organizations :
This arcane world of blind trusts, nameless accounts, and faceless money is understood by only a handful of lawyers who study the intricacies of the tax code as though it were a page turning thriller. In the case of est, all the money trails led back to one man - Harry Margolis, the tax lawyer who appeared to be the mastermind behind Erhard's international empire.[6]
In 1976 the IRS indicted Harry Margolis on charges of tax fraud on behalf of Werner Erhard and Associates, a charge later dropped. Werner Erhard later sued the IRS for damages and won $200,000.
[edit] See also
- Ellen Erhard v. Werner Erhard, United States Court of Appeals for the Ninth Circuit, Public Record, June 20, 1996, for issues related to IRS tax petition disputes between Werner Erhard and his 2nd wife, Ellen Erhard. The case decided as follows: "Ellen Erhard appeals the Tax Court's dismissal of her petition as untimely filed. We affirm."
[edit] Presentaciones Musicales, S.A. (PMSA)
Harry Margolis was mentioned in dealings with his Panamanian company Presentaciones Musicales, S.A., that involved a tax-shelter controversy which included producer Alan Douglas, and Al Hendrix, Jimi Hendrix's father, among others
PMSA and the other overseas companies were later discovered to be part of a tax shelter system created by Harry Margolis", reported the L.A. Times, "a Saratoga attorney whom federal prosecutors charged but never convicted of tax fraud. The tax shelter plan collapsed after Margolis' death in 1987, and also [prompted] complaints from the estates of other entertainment clients, including singer Nat King Cole, screenwriter Larry Hauben as well as from followers of New Age philosopher Werner Erhard, who allegedly stashed revenues from his EST enterprise in the foreign account.[7]
Margolis had initially utilized Presentaciones Musicales, S.A. when he created the legal corporate structure behind Werner Erhard's Erhard Seminars Training :
As EST was being formed, Erhard sold, for a promise of $1 million, what he called his "body of knowledge" to Presentaciones Musicales, S.A. (PMSA), a Panamanian corporation, whose nature, musical or otherwise, remains hidden behind the Panamanian secrecy-in-business laws designed to attract U.S. investors. EST then turned around and paid PMSA $1.2 million for the license to that body of knowledge for 10 years. What's known of PMSA's recent history leads to Margolis. Everyone Mother Jones could find who was associated with recent PMSA activities was a Margolis employee.[8]
[edit] Notable tax evasion cases
- 1986 - Goldberg v. United States[9]
[edit] Notable legal clients
- Werner Erhard, founded Erhard Seminars Training
- Jack Rafferty, San Francisco nightclub promoter
- Barbara McNair, singer, entertainer, actress
- Nat King Cole, American singer and jazz musician
- Dalton Trumbo, American screenwriter, novelist
- Larry Hauben, American screenwriter
- Hal Lipset, private investigator[12]
- Norman Granz, jazz impresario
[edit] References
- ^ Social Security Death Index, Harry Margolis, November 17, 1919 - July 1987, Saratoga, Santa Clara, California 95071, Age 67.
- ^ Pressman, Steven, Outrageous Betrayal: The dark journey of Werner Erhard from est to exile. New York: St. Martin's Press, 1993. ISBN 0-312-09296-2, p.46
- ^ Reinvoicing and Transfer Pricing Schemes, The Asset Protection Book, Tax Evasion., Adkisson Publishing, Inc., 2005-2006 Copyright.
- ^ Reinvoicing and Transfer Pricing Schemes, The Asset Protection Book, Tax Evasion., Adkisson Publishing, Inc., 2005-2006 Copyright.
- ^ Jerome Goldberg and Marjorie Goldberg v. United States of America, No. 86-5632 (9th.Cir. 05/14/1986)
- ^ Weir, David; Noyes, Dan; and Center for Investigative Reporting (1983). Raising Hell: How the Center for Investigative Reporting Gets the Story., pp.149., Reading, Massachusetts: Addison-Wesley Publishing Co. ISBN 0-201-10858-5.
- ^ The Covert War Against Rock, by Alex Constantine, Published by Feral House, April 2000, excerpt, Ch. 7, ISBN 0-922915-61-X
- ^ "Where Erhard Launders the Money", by Arnold Levinson - Let Them Eat Est, Mother Jones, December 1978, pp. 41-54, Copyright 1978 by Suzanne Gordon.
- ^ Goldberg v. United States, Jerome Goldberg and Marjorie Goldberg v. United States of America, No. 86-5632 (9th.Cir. 05/14/1986), United States Court of Appeals for the Ninth Circuit
- ^ Schulman v. United States, United States of America v. Gerald L. Schulman, No. 86-5251 (9th.Cir. 05/20/1987), United States Court of Appeals for the Ninth Circuit.
- ^ Werner Erhard in Erhard v. Commissioner of Internal Revenue, No. 93-70357 (9th.Cir. 02/08/1995), United States Court of Appeals for the Ninth Circuit.
- ^ death Of Hal Lipset, 1997, National Association Of Investigative Specialists, Inc.
[edit] External links
- Werner Erhard Tax Evasion, Werner H. Erhard v. Commissioner Internal Revenue Service
- Tax Evasion Schemes, often currently called "Margolis schemes", due to Harry Margolis
- The Winds of Werner, Forbes magazine, November 18, 1985, Richard Behar & Ralph King Jr.
