Helmsleys Due Tax Refund, Accountants Argue

Lawyers and accountants for Leona Helmsley squabbled Monday over a last-minute effort to find tax deductions that would mean a hefty refund for the same years the self-styled hotel queen and her husband are accused of cheating on their income taxes.

The technical arguments ended testimony in the 8-week-old trial, where earlier Helmsley was described as telling an employee that only “little people” pay taxes.

Helmsley looked tired but composed during the proceedings in U.S. District Court. The jury will probably begin deliberations by the end of the week.

Helmsley, 69, is accused of extortion, conspiracy and mail fraud in addition to billing $4 million worth of renovations at her 26-acre Greenwich, Conn., estate to the Helmsley hotel business and failing to pay millions of dollars in taxes.

Her ailing 80-year-old husband, Harry, has been severed from the trial because of failing health.

Defense attorney James Bruton presented two Touche Ross accountants who argued that the government actually owes $591,000 to the Helmsleys for the same years the pair is accused of cheating on their income taxes.

U.S. District Judge John Walker, in allowing the testimony in the trial, warned jurors that it only applied to six of the 47 counts against Mrs. Helmsley.

On Monday, tax experts Robert Schweihs and Gerald Padwe--whose fees, not including their staffs, total $585 per hour--testified that the tax on properties in Los Angeles, Chicago, Dallas and New York should be reduced, although revised income tax forms had not been filed.

Schweihs explained that parts of business properties could be regarded as personal if they were movable, which he said included carpeting that is tacked down, not glued, wallpaper, window blinds, shades and curtains.

Padwe said the tax team had worked nonstop over the past few weeks and through the weekend to come up with the new refund figures turned over Monday, pared down by about $100,000 from last week’s estimate.

“Maybe if we gave you another week it will be gone altogether,” prosecutor James DeVita commented to Padwe, provoking laughs around the otherwise stultified courtroom.