A dress designer's tax woesAlbert Nipon, then a manufacturer of staid maternity clothes, became the
talk of the fashion world in the early 1970s when he introduced a line
of ultra-feminine dresses. When the fashions appeared, everyone else
was selling sportswear and jeans, but the carefully tailored garments
were quickly snapped up by Saks Fifth Avenue, Neiman-Marcus and other
tony department stores. The onetime Du Pont accountant was on his way.
Sales of Nipon's dresses this year are expected
to reach $60 million, and he has collected a clutch of celebrity
customers, including Mary Tyler Moore, Barbara Walters, Rosalynn Carter
and Nancy Reagan.Last week Nipon, 57, was again the talk of the fashion world, but for a
very different reason. He was indicted by a federal grand jury in
Philadelphia for evading nearly $500,000 in personal income taxes and
more than $300,000 in business taxes. In addition, Nipon was charged
with paying bribes of $200,000 to two Internal Revenue Service agents
to cover up his tax discrepancies. U.S. Attorney Edward Dennis Jr.
called the case “one of the largest bribery schemes ever uncovered.”The charges against Nipon are part of a 3-year investigation of the
IRS's Philadelphia office, which has already led to the indictment of
six present and former Government workers. According to the indictment,
Tax Agent Meyer Weiss examined Nipon's 1978 and 1979 returns and
discovered that they were fraudulent. But instead of filing a report
with his office, Weiss conducted a phony audit in exchange for the
payoff. In November 1980, Nipon made the first of what would be four
$50,000 cash payments to another IRS agent, Edmond Costantini, who
served as intermediary. In 1982 Costantini paid $15,000 to a third IRS
agent so that Nipon's 1980 corporate return would be approved.The Government claims that in 1978 Nipon had a taxable personal income
of $884,309 and owed the Government $508,063 in taxes. But he reported
income of only $32,282 for that year and a tax liability of just
$19,834. In a statement last week, Nipon blamed the discrepancy largely
on “the disallowance of expenditures for improvements, furnishings
and renovations to my home, which were paid for by the company.”
Nipon and his wife Pearl, who heads the dress company's design team,
live in Gladwyne, outside Philadelphia, in a Norman-style manor on a
sumptuous 6.8-acre estate that he bought for $412,500.Nipon had no comment on the question of whether he had bribed the IRS
agents. After pleading not guilty to the fraud charges, he deposited $1
million with the IRS to cover any additional tax payments that may be
necessary. If convicted he faces up to 15 years in prison and a $30,000
fine.
