Bought $480,000 Worth Tax-Free : Hotel Chain’s Helmsley Named in Jewelry Fraud

Leona Helmsley, who dubbed herself “queen” of the Helmsley hotel chain, paid no sales tax on at least $480,000 worth of jewelry she bought from Van Cleef & Arpels, according to court documents.

The exclusive retailer and two of its senior executives were indicted this year on charges that they falsified business records and did not collect sales tax on $4.6 million in purchases.

The indictment charged that the store would send an empty box or a box containing a worthless trinket to an out-of-state address, making the customer’s actual purchase exempt from sales tax while allowing the customer to take the jewelry home.

Documents filed in April by the defense contend that Helmsley, a regular customer at Arpels, was a less than passive participant in the alleged scheme.

The wife of real estate magnate Harry Helmsley, she is featured in hotel advertisements proclaiming that her guests will receive royal treatment because she personally oversees each establishment.

Between 1980 and 1984, the documents say, she made 10 tax-free purchases, saving her an estimated $38,000. In two of the purchases, empty boxes were sent to an out-of-state address provided by Helmsley, the documents said.

“She was the one who said, ‘I don’t have to pay tax since I have a residence in Connecticut,’ ” former salesman Daniel Issert said in a deposition taken earlier this year.

Steven M. Hayes, Helmsley’s lawyer, said she “fully believed that the price she was paying for the jewelry was inclusive of sales tax--she had no idea at all that they (the store owners) were not paying any taxes that were due.”

Hayes said that Helmsley had access to a house in Connecticut but that her residence is in New York.