The Voice has learned that Henry Kissinger, Frank Sinatra, Mary Tyler Moore, Donald Trump, and other celebrities were involved in a sales tax evasion scam that resulted in the indictment last year of an exclusive Fifth Avenue jeweler and two of its executives.
Danaos Ltd., which operates the Bulgari jewelry store in the Hotel Pierre, was charged in the indictment with failing to collect sales tax on more than $1.5 million in transactions. The indictment alleges that Bulgari and two of its officials, Nicola Bulgari and Richard Storm, used the “empty box” scam to illegally allow customers to avoid paying New York State sales tax. Customers with out-of-state addresses would have their purchases recorded as being mailed or delivered to them in order to avoid paying sales tax. However, the indictment charged, customers would leave Bulgari with their jewelry, while store employees would mail an empty box, or one containing a piece of costume jewelry, to the out-of-state address.
The Danaos indictment refers to 101 separate transactions, ranging from $240 to $130,000 per item, on which the scheme was employed. While Attorney General Robert Abrams, who is prosecuting the Bulgari case, has refused to release customer names, the Voice has interviewed two former Bulgari employees who took part in the scam and compiled a partial list of these customers.
Both former employees detailed how Bulgari security personnel would package worthless chokers and mail them to customers and how, at Christmastime, they would prebox dozens of chokers to be prepared for the holiday tax evasion rush. The employees also noted that security officials would designate the bogus shipments by marking an asterisk next to the transaction in the company’s registered mail logbook. Bulgari employees, investigators discovered, often put only enough postage for an empty box on packages supposedly containing items ranging in weight from a few ounces to several pounds.
During the period audited by state investigators — December 1980 to March 1983 — Bulgari customers involved in the empty box scam included:
- Henry Kissinger, who made two purchases, totaling about $20,000, on which he did not pay sales tax. His lawyer, Arthur Liman, does not dispute this, but claims that Bulgari “should have charged him the tax, but they didn’t. It’s their fault.” Liman said that Kissinger’s assistant, Chris Vick, was subpoenaed to testify before the grand jury, but that Kissinger himself was not called. While Liman denied that empty boxes were sent to two Washington, D.C., addresses, a former Bulgari employee told the Voice that he delivered the boxes to the post office.
- Frank Sinatra had jewelry delivered, on at least three occasions, to his Waldorf Towers suite, where an aide would sign for it. Empty boxes were mailed to casinos in Las Vegas and Atlantic City, according to a former Bulgari employee, who estimated Sinatra’s purchases at about $30,000.
- Mary Tyler Moore purchased about $20,000 in jewelry during the audited period and had it delivered to her West Side home. The empty boxes were sent to a business associate in New Jersey. Jackie Becher, Moore’s publicist, said the actress was busy rehearsing a new play and would have no comment.
- Donald Trump, according to the former employees, made at least two purchases at the store — a necklace for $50,000 and a second purchase of about $15,000. On the smaller purchase, an empty box was sent to the Connecticut home of Trump’s former attorney Roy Cohn. Trump’s spokesman, Howard Rubenstein, said that the developer denied using the empty box scheme and that his purchases at Bulgari “were bona fide transactions.”
- Takeover specialist Ronald Perelman, who last week made a $40 million profit on a stock sale, was one of the store’s biggest customers, and often benefited from the scam. A Bulgari employee would deliver Perelman’s jewels to the East 63rd Street headquarters of MacAndrews & Forbes, his company. Bulgari’s business records made it appear that the jewelry was actually mailed to a Philadelphia address. On one occasion, store records were doctored to make it appear that a Bulgari car drove to Philadelphia to deliver an item to Perelman. Rubenstein, Perelman’s spokesman, said that the businessman contends “he made no such purchases and did not appear before the grand jury.”
- Adnan Khashoggi, the billionaire Saudi Arabian arms dealer, made two purchases totaling more than $200,000 worth of silver items and had them delivered by courier to his Olympic Towers residence. The empty boxes were sent to Geneva. Khashoggi is reported to be the world’s richest man; the empty box scheme saved him about $17,000.
- C. Z. Guest, who writes a weekly gardening column for the Post and is a staple on New York’s social scene, allowed various friends to use her Florida estate as a dumping ground for empty boxes. Guest, herself one of Bulgari’s biggest customers, refused to answer Voice questions.
- Television producer Mark Goodson used a Fair Lawn, New Jersey, address for his empty boxes. A spokesman for Goodson said be was subpoenaed to testify before the grand jury, but never did. Goodson’s lawyer, Roy Blakeman, did not return Voice calls.
Though many customers, in effect, conspired with Bulgari to evade sales tax, Abrams has contended that since it is a retailer’s obligation to collect sales tax, they are the only ones who can be successfully prosecuted. Later this week, Storm and Bulgari will appear before Judge Harold Rothwax where a plea agreement may be announced. ■
This article from the Village Voice Archive was posted on November 15, 2020