Morris Zuckerman, Tax Evasion, NY 2016

NEW YORK, NY – Manhattan energy investor Morris Zuckerman will spend the next 5 years and 10 months behind bars after being sentenced today to 70 months in federal prison for a brazen, multi-year tax evasion scheme totaling over $45 million. Zuckerman, the principal of M.E. Zukerman & Co., pleaded guilty June 3, 2016, before U.S. District Judge Analisa Torres, who handed down the sentence.

The scheme, as detailed by Acting U.S. Attorney Joon H. Kim, centered around the $130 million sale of a petroleum products company in 2008. Instead of paying his due, Zuckerman concocted a false narrative, claiming he’d transferred ownership of the company subsidiary to a family trust a year prior. Backdated documents – promissory notes and a fabricated board resolution – were created to support the lie, effectively hiding the sale from the IRS and dodging over $33 million in corporate income taxes.

But Zuckerman’s greed didn’t stop there. The $130 million in proceeds were funneled through his family trust, personal accounts, and shell corporations, including Zukerman Investments. Over the next five years, more than $50 million was spent on Old Master paintings – works by European artists from the 15th through 19th centuries – to adorn his Upper East Side apartment and those of family members. This wasn’t just lavish spending; it was fuel for further criminal activity.

To avoid paying New York State sales and use taxes on the artwork—totaling over $4.5 million—Zuckerman orchestrated a logistical charade. Paintings purchased from galleries near his Manhattan residence were shipped to corporate addresses in Delaware and New Jersey, then immediately transported back to New York, bypassing state tax obligations. The paintings were moved “sometimes within minutes” according to court documents, a blatant attempt to game the system.

The fraud extended to Zuckerman’s personal income taxes. He directed tax preparers to file false returns, claiming millions in fraudulent deductions – phony charitable contributions and fabricated investment interest expenses. He also diverted corporate assets from M.E. Zukerman & Co. for personal use, further obscuring his income and obstructing the IRS. “For brazenly cheating on his tax obligations – a duty that all Americans owe to each other – Zukerman will now spend significant time in a federal prison,” stated Kim.

Zuckerman’s elaborate scheme ultimately crumbled, landing him a substantial prison sentence and a hefty financial penalty. The case serves as a stark reminder that even the wealthiest individuals are not above the law, and attempts to defraud the government will be met with swift and severe consequences. The investigation was conducted by the Internal Revenue Service, Criminal Investigation division.

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