IRS Expert Stays in Michael Jackson Case Despite ‘Lies’ by Bryan Koenig
Law360, Washington (October 20, 2017, 8:25 PM EDT) — Although an IRS expert lied on the stand about his work on cases like that of Michael Jackson’s estate, with hundreds of millions of dollars at stake, that isn’t enough to exclude his testimony outright and gut a crucial part of the agency’s case, a U.S. Tax Court judge has ruled.
Judge Mark V. Holmes preferred instead to account for the lie when he considers the testimony from intellectual property expert Weston Anson, chairman of Consor Intellectual Asset Management, who admitted under cross-examination that it wasn’t true when he testified that he had “not begun any work” on the Whitney Houston case. In fact, Anson’s firm was retained by the IRS in that matter as well and had prepared an expert report.
Jackson’s estate had sought to exclude all of Anson’s testimony for a variety of reasons, but Judge Holmes refused. In the Sept. 29 decision, the judge said he would “duck” on the question of whether the expert had committed perjury, noting that perjury is a criminal offense governed by criminal statutes, and this case wasn’t a criminal one.
“We will instead simply find that Mr. Anson lied under oath because the parties don’t dispute that he did,” the judge said.
But the judge found no deception in the omission of Anson’s work for a company called Domain Assets LLC because his report did mention working for Consor, which does business as Domain Assets.
Nor should the testimony be excluded because the lies reflect a bias for the IRS, according to the ruling, which noted that bias usually affects the weight of testimony rather than its admissibility.
“Only when an expert report becomes absurd or ‘so far beyond the realm of usefulness’ does bias make an expert report inadmissible,” Judge Holmes said. “That isn’t the case here, so any bias that Mr. Anson’s false statements may reflect will be accounted for in the weight given to his testimony.”
Striking that testimony would have left the IRS with no evidence in the agency’s favor on the key issues in the case, according to the ruling.
An attorney for the estate said Friday that the decision was one “we can live with.” Avram Salkin of Hochman Salkin Rettig Toscher & Perez PC told Law360 that the ruling was well thought out and an important ding against Anson’s testimony.
Anson was called to the stand during the third and final week of the trial in Los Angeles earlier this year to explain some of the details behind his report concluding that Jackson’s publicity rights were worth $161 million at the time of his death. The value of those rights, also known as name and likeness rights, has been hotly contested in the estate’s dispute with the IRS. The estate’s own expert, Jay Fishman, said the rights were worth only $3 million at the time of Jackson’s death in 2009.
Jackson’s estate petitioned the Tax Court in July 2013, challenging a lengthy notice of deficiency the IRS mailed to the estate that month. The notice contested the estate’s reported valuation of a litany of items, including a 2001 Bentley Arnage and rights to the master recordings of the Jackson 5.
According to the notice, the IRS had adjusted the value of the estate to $1.32 billion from $7 million. As a result, the agency demanded $702 million, including $505.1 million in deficiencies and $196.9 million in accuracy-related penalties.
The most notable discrepancy between the valuations of the parties as highlighted in the notice included the right to Jackson’s image and likeness. The IRS originally pegged that asset at $434.3 million, whereas the estate had claimed the right was worth only $2,105.
The IRS does not comment on litigation.
Judge Holmes also said “we believe him” in response to IRS arguments that while Anson omitted from his C.V. one publication he penned and one case where he provided expert-witness testimony during a deposition, those omissions were simply “clerical error.”
“Mr. Anson’s C.V. discloses 100 cases where he acted as an expert witness in some capacity and more than 100 publications he’s written, so the inadvertent exclusion of two is understandable and, we find, in good faith,” Judge Holmes said in a Sept. 29 decision refusing to toss Anson’s testimony.
The judge also refused to exclude the testimony as the “gatekeeper” against unreliable evidence under Rule 702 of the Federal Rules of Evidence.
There are cases, Judge Holmes said, where an expert’s lies about background and qualifications have resulted in exclusion of testimony. But this is not one of those cases.
“There has to be some consequence for Mr. Anson’s false testimony about his dealings with the IRS, but to in effect strip the commissioner of any expert testimony about the value of the estate’s assets because of Mr. Anson’s parsimonious relationship with the truth about his dealings with the IRS in other cases seems to us too severe,” the judge said. “A more proportionate remedy would be to discount the credibility and weight we give to his opinions.”
Jackson’s estate is represented by Avram Salkin, Charles Paul Rettig, Steven Richard Toscher, Robert S. Horwitz, Edward M. Robbins Jr., Sharyn M. Fisk and Lacey E. Strachan of Hochman Salkin Rettig Toscher & Perez PC, Paul Gordon Hoffman, Jeryll S. Cohen and Loretta Siciliano of Hoffman Sabban & Watenmaker APC, and Howard L. Weitzman of Kinsella Weitzman Iser Kump & Aldisert LLP.
The IRS is represented in-house by William M. Paul, Donna F. Herbert, Bruce K. Meneely, Sherri Spradley Wilder and Jordan Musen.
The case is Estate of Michael J. Jackson et al. v. Commissioner of Internal Revenue, case number 17152-13, in the U.S. Tax Court.