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The Al Capone Tax Evasion Case

February 7, 2018

Alphonse Capone – typically known as “Al” Capone – was a notorious gangster who, at the height of his power, ran and commanded one of the most profitable criminal organizations in history. Born in Brooklyn, New York in 1899 to parents of Italian descent, Capone began his criminal career early and by his mid-20s he had gained national prominence. Capone engaged in a wide variety of criminal activities – bootlegging, running numbers, prostitution, extortion and others as well. At its peak, Capone’s criminal empire was worth approximately $1.3 billion when adjusted for inflation.  The Al Capone tax evasion case brought that empire crashing down.

Capone managed to evade authorities for his many crimes for a surprising length of time. That was partly due to his practice of bribing policemen, judges, public officials and others who had the capacity to bring him to justice. Federal authorities, however, made it their mission to end the corruption and imprison Capone.  In 1931, Capone was successfully prosecuted for multiple counts of tax evasion. Let’s explore the details of the Al Capone tax evasion case in a bit of detail. 

The Case Against Capone 

Capone lived an extravagant lifestyle and his nefarious activities were widely known by the authorities for many years. The problem facing prosecutors was being able to produce sufficient evidence to convict Capone. Prosecutors knew that it would be extremely difficult to produce witnesses who would testify against him in court, and so at first Capone was offered a relatively light sentence (of 2 years) in exchange for a guilty plea. The presiding judge in the case, though, was determined to put Capone away for longer, so he disallowed the lenient plea bargain.  

Fortunately for the prosecution, testimony from numerous witnesses showed that Capone was the de facto owner of a highly profitable smoke shop. Witnesses said that Capone had been earning large sums of money from the shop for many years. Other witnesses also testified about Capone’s wild spending habits. Considered as a whole, these factors created enough circumstantial evidence to demonstrate that Capone was in fact guilty of tax evasion. 

In addition to an eventual 11 year prison sentence, Capone wound up being held liable for $215,000 in back taxes, as well as $50,000 in fines. He was also ordered to pay all court costs. The penalties were the largest ever for a tax evasion case up to that time.  

Life After the Al Capone Tax Evasion Trial

Capone finished his sentence for tax evasion in early January, 1939 and was then sent to another correctional institution to serve an additional 6 months for contempt of court. He was formally paroled and finally left prison on November 16, 1939, having served a bit more than half of his 11-year sentence. Once out of prison, Capone relocated to Florida where he joined his wife and child. He remained in Florida until his death in 1947. 

The Capone case is fascinating for a variety of reasons, but one of the more intriguing aspects of the Al Capone tax evasion case is the fact that Capone was able to avoid capture for as long as he did. What this case also demonstrates is that, no matter how much you try to avoid your tax obligations, Uncle Sam works overtime to collect his payment.  

Nowadays, most IRS tax evasion cases arise out of simple civil audits.  According to John D. Fort, the IRS Chief of the Criminal Investigation Division, the IRS is focused on three primary criminal investigation areas:  1.  general tax crimes; 2. nationally coordinated investigations; and 3. international tax enforcement.

If you, or someone you know, are concerned that an IRS criminal investigation is starting, call a NYC tax attorney at Mackay, Caswell & Callahan today.

Image credit: Nicolas Raymond 

Comments

Is Income from Illegal Activities Taxable? | New York Tax Attorney 9 months ago

[…] illegal activities is the case of Al Capone. As we discussed in one of our earlier blog posts, Al Capone was a notorious gangster who rose to power and influence in 1930s Chicago. Capone became the head […]

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Comments

Is Income from Illegal Activities Taxable? | New York Tax Attorney 9 months ago

[…] illegal activities is the case of Al Capone. As we discussed in one of our earlier blog posts, Al Capone was a notorious gangster who rose to power and influence in 1930s Chicago. Capone became the head […]

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