Helmsley Convicted of Tax Evasion

PERHAPS the moral of the story is that no matter how much money you have, don't blatantly cheat on your taxes. That's the message a federal jury gave to Leona Helmsley on Wednesday morning when it found her and two associates guilty of 39 counts of evading $1.2 million in taxes, mail fraud, and conspiracy.

``This case which so thoroughly captured the public's eye shows that no one, no matter how wealthy or insulated by underlings is free of the tax laws,'' said Benito Romano, the United States attorney for the southern district of New York, at a press conference.

Mrs. Helmsley was found not guilty of extortion, a charge that could have resulted in a 20-year prison sentence.

After the trial, Helmsley walked down the steps of the court house and refused to comment on her conviction to TV crews and photographers.

The guilty verdict on tax evasion capped a seven-week trial which captivated New York City. On trial was a woman who billed herself as ``the queen,'' the royal head of a $5 billion hotel and real-estate empire.

During the course of the trial, New Yorkers watched as the government wheeled in grocery carts of documents that revealed how scores of personal expenses were billed to the Helmsley empire. At the same time, Helmsley had her business take up hundreds of thousands of dollars in renovation expenses for her Greenwich, Conn., home, Dunnellen Hall.

Helmsley's attitude was summarized by a former housekeeper who recounted that Helmsley once said, ``Only the little people pay taxes.''

But her attorney, Gerald Feffer, pointed out the Helmsleys paid over $57 million in taxes during the years in dispute.

The case never would have been brought if it were not for the way Helmsley treated employees. She was known for firing scores of workers depending upon her mood. These disgruntled employees reported her tax maneuvers to the New York Post.

After the charges were aired, the Justice Department began an investigation.

During the trial it became clear that Helmsley's accountants - Touche Ross and Eisner & Lubin - had at the very least turned a blind eye to the illegal practices. In his summation, assistant US attorney James DeVita said the trial showed the accounting profession has some problems.

Helmsley is not the first billionaire to be charged with tax evasion. The government indicted Marc Rich, a commodities trader who fled the country and now lives in Switzerland. The government also convicted the head of the Gucci shoe empire for tax evasion. ``We have gone after other celebrities before,'' said Mr. Romano. Romano pointed out it is difficult to know how many people have paid more taxes as a result of this trial. The original indictment was handed down on April 14, 1988.

The humiliation is not over for Helmsley. She now faces state tax evasion charges with a trial scheduled for October. ``We're prepared to go to trial,'' says Scott Greathead with the state attorney general's office. Her sentencing is scheduled for Nov. 14.

Although Helmsley faces a possible long jail sentence, it is doubtful Judge John Walker Jr. will impose a consecutive sentence. However, the judge is known for his tough sentences especially on white-collar criminals. He is a former chief of criminal enforcement for the US Treasury. This could mean there could be guards protecting ``the queen.''