26 Aug Leona Helmsley: The Queen of Mean’s Tax Evasion Story
The hotel empress, Leona Helmsley, whose iron-fisted management style and legendary cruelty towards her employees earned her the nickname the ‘Queen of Mean,’ had a leading role in one of the most notorious tax cheats of the 20th century. In her heyday, she was as big and influential as Donald Trump, Beyonce, or Kim Kardashian. But her fall started with small and apparent acts of evasion.
One moment she was being praised in fancy magazines and New York salons as an exceptional businesswoman and hostess of outlandish Manhattan parties. The next moment, she was sharing a prison cell with other criminals.
So, how did it all happen? Leona’s husband, Harry Brakmann Helmsley, was one of the world’s wealthiest real estate moguls, with an estimated $10 billion in property holdings. The couple lived in a penthouse overlooking Central Park and occasionally visited their other favorite property, a mansion in Greenwich, Connecticut.
Though they happily and lavishly decorated their hotel and homes, they weren’t so enthusiastic about paying their bills and taxes for their purchases. Most of their furniture was written off as a business expense or extorted from their suppliers. Contractors that worked for them were hardly ever paid (if at all), and many filed lawsuits to recover what they were owed.
Leona would also buy hundreds of thousands of dollars worth of jewelry in New York, but she demanded that empty boxes be sent to Connecticut to avoid the taxes. She famously once made a sales clerk rewrite a bill for earrings to save $4 in sales tax! She would also put shoes that she bought on their business accounts, wear them, and then send them back to the store demanding a refund.
Eventually, because they used company funds to renovate their Connecticut mansion, Leona and her husband were charged with income tax invasion. By that time, Harry’s health had deteriorated, and he was deemed incompetent to stand trial. In the end, Leona had to serve eighteen months in prison.
The contractors’ lawsuits were what ultimately did her in because they caught the IRS’s eye. Another breaking point was her infamous treatment of her employees, as terrified women and men lined up to testify against her. Her housekeeper revealed that she overheard Leona saying: “We don’t pay taxes. Only the little people pay taxes.”
Federal Judge John Walker publicly reproached her, saying, “Your conduct was the product of naked greed and the arrogant belief that you were above the law.” She was initially sentenced to sixteen years in prison and fines of $7 million, but on appeal, she was sentenced to four years. When she died in 2007, she cut two grandchildren out of her will and left $12 million to her pampered Maltese pup.
People always try to maximize their tax deductions, and while there are some strange but legal deductions out there, everyone should be cautious. You can’t deduct everything, though some wealthy people seem to try. If you want to read more about celebrity tax evasion stories or need advice from a tax resolution specialist, contact Golden Tax Relief today!