Ex-adviser says he warned Snipes on taxes

updated 11:55 a.m. ET Jan. 18, 2008

OCALA, Fla. - A financial adviser has testified that he warned Wesley Snipes that he could get into trouble if he didn’t pay his taxes.

Snipes is on trial on charges of tax fraud, conspiracy and willful failure to file tax returns. He faces up to 16 years in prison.

The 45-year-old actor allegedly stopped filing returns, illegally sought refunds totaling $11 million for 1996 and 1997 taxes paid, and drew fake checks to pay the U.S. Treasury.

Kenneth Starr, head of New York-based Starr and Co., testified Thursday that he tried to persuade Snipes to pay his taxes in a 90-minute telephone conversation in 2000. Starr handled the actor’s taxes before Snipes met his co-defendants.

“(Snipes) was adamant about the fact that he did not have that obligation,” Starr said. “I said that was ridiculous; that everyone has that obligation. He said he had spoken to some people that said he didn’t have to.”

Prosecutors say Snipes paid taxes in the ’90s, but changed his mind after meeting co-defendant Eddie Ray Kahn, founder of the tax protest groups American Rights Litigators and Guiding Light of God Ministries, in 2000.

Kahn and Douglas P. Rosile, who allegedly prepared Snipes’ false documents, are co-defendants. They face up to 10 years in prison.

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Prosecutors Thursday presented letters that Snipes sent to the Internal Revenue Service that insisted the agency was never properly established and didn’t prove he had to pay taxes. Snipes gave the government several timelines, then declared himself the winner in a default judgment when agents didn’t respond.

Starr said he had a good relationship with Snipes before the actor stopped believing in taxes.

“He said, ‘You always think you’re right and you always think you know everything. You’re not right about this,”’ Starr recalled of his pivotal phone call with Snipes in 2000. The next day, Starr terminated his services.

Defense attorneys said Starr never told Snipes in writing that it would be illegal to stop paying taxes. Starr said he told Snipes on the phone and nothing further was needed to end their tax arrangement.

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