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U.S. Sues Roy Cohn for $7 Million in Back Taxes

Times Staff Writer

After more than a quarter of a century of fighting with him about his taxes, the federal government filed suit Thursday against Roy M. Cohn to collect almost $7 million the Internal Revenue Service says it is owed.

The civil suit seeks to seize and sell Cohn’s Manhattan town house and his Connecticut estate, charging that the controversial lawyer and some of his law partners concealed his true ownership of the properties so tax liens couldn’t be collected.

“A lot of money is owed to the U.S. government, and we will go about collecting it,” said Rudolph W. Giuliani, the U.S. attorney in Manhattan, whose office filed the civil action against Cohn and seven of his associates.

A Different View

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Cohn expressed a different view Thursday. “It’s a lot of baloney,” he said. “I paid all the taxes that were due. The fact is, what I do earn, I pay taxes on. The Internal Revenue Service is as inept and clownish as any agency I have ever dealt with in my life. We beat them before and we will beat them again.”

The suit charged that Cohn, 58, once the brash, young lawyer who hunted Communists for Sen. Joseph R. McCarthy’s stormy Senate committee in the l950s, owed $6,996,234.56 as of Jan. 24, 1986--with additional interest accruing constantly.

It charged that Cohn used funds from his mother’s estate as a down payment for the town house where he lives and where his law firm has offices. Even though nominal ownership of the property is under the name of the 39 East 68th Street Corp., government lawyers charged that Cohn has “dominion and control” over the corporation.

Cohn’s ‘Alter Ego’

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“The defendant . . . corporation is the alter ego of the defendant Roy M. Cohn,” the suit said. Federal lawyers charged that the corporation was created “for the purpose of placing that property . . . beyond the reach of defendant Roy M. Cohn’s creditors, including the United States of America.”

The suit further charged that Cohn and seven associates endeavored to conceal his interest in the six-story town house--the scene of an elegant New Year’s Eve party the lawyer gives each year. It also alleged that Cohn and the group concealed his assets by having his law firm use funds that would normally be paid him as salary, fees or other compensation. These funds were paid by the firm to third parties to cover virtually all of Cohn’s personal expenses.

The suit said that several times over the years, Cohn had agreed in U. S. Tax Court to pay back taxes and penalties, but he had never actually turned over the money. A schedule of his reported individual income, contained in court papers, showed it fluctuated over the years, ranging from a high of $338,850.67 in 1966 to a low of $l3,390.19 in 1976. In 1983, the last year shown, Cohn showed individual income of $20,424.46.

Says He Has Cancer

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The suit Thursday, which also was filed in Connecticut, was just the latest problem facing the lawyer, who says he suffers from life-threatening liver cancer. The Appellate Division of the New York state Supreme Court is considering disbarring Cohn on charges of mishandling clients’ funds, illegally using an escrow account and practicing “dishonesty, fraud, deceit and misrepresentation.” Cohn denies all of the charges.

Giuliani said his staff proceeded promptly with the case after it was referred to his office in December.


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