Buss, Mariani Settle Tax Bill, Pay $1 Million

Jerry Buss and Frank Mariani paid $1 million to Arizona’s Maricopa County Friday to settle an alleged underpayment of property taxes. Buss owns the Lakers, the Kings and the Forum. Mariani is his business associate.

“It was just one, big, fat mistake,” Buss said. “I was not aware of the situation. There was no intent to commit any type of violation. It was unfortunate. I feel a great sense of relief. I want to apologize to anyone I’ve caused any inconvenience. I don’t want people to think I’m a cheat. I don’t want people to look at me and say, ‘There goes that tax dodger.’ ”

According to the Maricopa County Assessor’s and Treasurer’s offices, Buss and Mariani underpaid taxes on 206 Arizona properties by $522,435.05. Some of the properties were owned for as long as seven years. The figures are based on the last five years.

Joe Abodeely, Maricopa deputy county attorney and the investigator in the case, asked for the additional money to cover attorneys’ fees, penalties, uncomputed compound interest and the cost of the investigation, which has been going on for nine months.

“He got his hand caught in the cookie jar,” Abodeely said. “He didn’t pay some taxes. We persuaded him this would be the best way to resolve this matter. We asked him to put the cookies back and asked him to put some more in.

“I think Maricopa County recouped at least what was owed to it, and hopefully, we sent a message that we want people to pay their taxes.

“I’m very glad the matter has been resolved. This is a reasonable disposition for all parties concerned. It’s a fair amount because of the potential liability faced. The parties concerned could have potentially faced the payment of three times the amount, but if we had gone to trial, we may not have gotten anything.”

Before the settlement, Abodeely said he would not rule out prosecuting Buss and Mariani under the state’s Racketeer Influenced and Corrupt Organizations Act. A conviction could have meant triple damages and possible prison sentences.

“They could be prosecuted for theft by misrepresentation and/or a fraudulent scheme . . . and/or conducting a criminal enterprise,” Abodeely had said a month ago.

According to Buss, his attitude toward the situation changed markedly when he saw that quote in a Times story.

“It was a shock, a trauma, to pick up the paper and see your picture with threatened prosecution,” he said. “It was a very scary thing.

“The first I heard of the situation was September, October of last year. My understanding was, the attorneys would determine if we were liable. If we were, I told them, ‘Please pay.’ It’s only when the last two articles came out that it sounded very hard. That’s when the bad feelings came out.”

Those bad feelings, according to Buss, were transmitted to his children--John, 28; Jim, 26; Jeanie, 23, and Jane, 21.

“It was the most tearful thing I’ve ever been through,” Buss said. “They all read the article, then came running to me and looked at me. There was tremendous hurt there. It was a difficult thing to go through. I tried to explain to them what happened. They were behind me 100%.”

According to Buss, what happened was a delegation of authority that left him isolated from the details of a real-estate empire estimated to be worth about $350 million. He said his worth escalated rapidly in the late 1970s, going from approximately $10 million to nearly $80 million in three years.

“At that point, I was getting into sports with the Lakers, the Kings and the Forum,” Buss said. “I had never run anything that size before. So I put everything else behind me.

“This (tax) situation was so confusing. That’s why it came as a shock. There were escrow officers who worked for these people, who worked for these people, who worked for these people. I was very far removed.”

In Arizona, the tax rate for owner-occupied units is 10% of assessed valuation. For rental units, it is 18%. Buss and Mariani have owned 537 properties over the last seven years, but on 206 properties allegedly paid the owner-occupied rate. Buss and Mariani operate those properties through 20 limited partnerships, of which they are the general partners.

An investigation by Maricopa County officials discovered 46,000 cases of possibly delinquent taxes among 400,000 county taxpayers. But Buss and Mariani were thought to be among the major offenders because of the volume of property involved.

“My kids are obviously wishing my name was not the one selected out of this group of people,” Buss said. “We wish they would have used someone else for the test case.”

Asked if his players had any reaction, Buss said: “When I see Magic (Johnson), I ask him about things I read about in the paper. I asked, ‘How’s your thigh? (Johnson suffered a bruised thigh in the recently concluded Western Conference semifinals.) He asked me, ‘How’s your taxes?’ I told him, ‘Sore, but I think it will heal.’ ”

The tax case came to the attention of Maricopa County officials when an informant, known only as Walter, showed up at the County Assessor’s office. He claimed to be an employee of the Marshall Co., the Arizona firm that manages the properties for Buss and Mariani, and said he had first-hand knowledge of a deliberate attempt to defraud the county.

In paying, Buss said he weighed “what was asked for, what damage would be done if I did not pay, the bad publicity and the resultant impairment of the things I want to do. That is to work with children, with the handicapped. I don’t want to injure my relationship with them. I’m fearful this may have damaged my ability to help people I could have helped.

“The damage done to my reputation now is a question of conjecture. As a sports owner, I have children looking up to me, and I encourage them to work hard, to study hard, to be good people and to stay away from drugs. I want to help the disadvantaged and give children a role model. Have I lost my ability to help people with this kind of publicity? I don’t know.

“Anytime I receive a tax bill, I pay it. I pay $40 million to $50 million a year in taxes. I’m not going to do anything like this over such a small amount.”