Financier Must Pay U.S. $4.3 Million, Give $3 Million to Homeless Project : Posner Receives Probation in Tax Evasion Case

Miami Beach financier Victor Posner was sentenced Friday to probation for tax evasion and was ordered to pay $4.3 million to the U.S. government and create a multimillion-dollar project to aid the homeless.

The announcement by U.S. District Judge Eugene Spellman in Miami ended an eight-year legal battle for Posner, a pioneer corporate raider who is facing growing problems in his $4-billion corporate empire.

Spellman imposed a five-year term of probation, sentenced Posner to 5,000 hours of community service and demanded that he contribute at least $3 million to fund a study of the poor and homeless in south Florida.

Posner pleaded no contest in September, 1987, to charges that he evaded $1.2 million in income taxes by inflating the value of 22 acres of land he donated to a Miami Bible college in the 1970s. The judge declared him guilty on 10 counts.

He entered the plea a month before he was to be retried. A 1986 conviction was set aside because of jury irregularities.

A no-contest plea is not an admission of guilt, only a statement that the defendant will offer no defense. For sentencing purposes, it is equal to a guilty plea or conviction.

During the hearing, Posner’s attorney, Edward Bennett Williams of Washington, pleaded for an alternative to jail time.

Appeals for Mercy

Williams said Posner had always considered the tax case a civil matter. But the Internal Revenue Service did not see it that way and started a criminal investigation eight years ago.

“There are matters crying out for remedy,” Williams told the court. “It would serve no useful purpose to incarcerate this defendant. I appeal to your mercy and I appeal to your justice.”

Federal prosecutors had urged a jail term as a deterrent to tax evasion, and they complained that the sentence announced by Spellman was too lenient. Posner, 69, could have received a maximum term of 40 years in prison.

“Mr. Posner lied. He lied to the IRS in his income tax returns. He corrupted others in the course of his lies and . . . is persisting in those lies,” Assistant U.S. Atty. Neil Cartusciello told the judge.

But Spellman rejected the government’s arguments and said Posner could better serve the community by using his enormous wealth for a charitable cause.

Posner declined to comment on the sentence, except to say: “I’ve been involved in charity works all my life and I’ve given millions and millions to charity.”

But Spellman warned that if Posner failed to live up to his promise, he would send him to prison.

Posner, one of the highest-paid U.S. executives with a salary estimated at $8.5 million in 1986, controls a far-flung empire of 40 public companies. His personal fortune has been estimated at $180 million.

The money that Posner was ordered to pay the government included $2.1 million in back taxes and penalties, another $2.1 million in interest and a $75,000 criminal fine.

Posner was instructed to serve part of his community service under a Catholic priest at a Miami shelter for the homeless. Spellman said Posner proposed the project a month ago.

Another Wall St. Figure

Spellman said that if he had decided on a prison sentence, Posner would have served no more than six to nine months because of his age.

Posner is the second major Wall Street figure to be sentenced on criminal charges in the past two months. Ivan F. Boesky, once among the world’s most powerful stock speculators, received a three-year prison term in December for his role in America’s biggest insider trading scandal.

The son of a Russian immigrant, Posner was a millionaire by age 25.