For those who’ve not followed the fortunes — and more recently the misfortunes — of F. Lee Bailey, it might have come as a shock to hear that Friday he filed for Chapter 7 bankruptcy in Maine.
His assets: “A car worth less than two grand,” he told the Washington Post via telephone Sunday, “and some personal property worth less than five and a condo with a mortgage.” His liabilities: In excess of $5 million, owed to the IRS. And because the IRS imposes interest and penalties every day a taxpayer fails to pay, the debts were mounting rapidly.
“My tax case finally ran out of string,” he said, “and there was no option left but to live with the judgments or to get rid of them through bankruptcy.”
For those who were not around for the exploits of the fabled criminal defense lawyer, from the 1960s through the 1990s, when he was defending others rather than himself, perhaps FX’s “The People v. O.J. Simpson,” will refresh their memory. Actor Nathan Lane plays Bailey, a member of the legal “dream team” that successfully defended Simpson.
His storied career of hundreds of cases also includes defending Albert DeSalvo, also known as the Boston Strangler; Patty Hearst, the newspaper heiress convicted of bank robbery in 1976; and Ernest Medina, the former U.S. Army captain for whom Bailey won an acquittal in 1971 in connection to the My Lai massacre during the Vietnam War.
He famously defended Sam Sheppard, an Ohio physician convicted in 1954 of murdering his wife, winning a retrial at the U.S. Supreme Court in 1966 because of the media frenzy and hostile coverage surrounding Sheppard’s trial. Sheppard was acquitted on retrial. The film “The Fugitive,” starring Harrison Ford, was loosely based on Sheppard’s case.
Bailey’s conflicts with the government began when U.S. Department of Justice prosecutors used him to assist them in seizing millions of dollars worth of assets of a French citizen, Claude L. DuBoc, ultimately convicted in 1994 of international drug smuggling and money laundering.
In an unusual deal with federal prosecutors in Florida, Bailey agreed to take over and place DuBoc’s shares in a pharmaceutical company into a Swiss bank account in his name, largely because the government couldn’t own stock and was reluctant to have the shares liquidated for fear of destroying the company. The shares were expected to increase significantly in value and produce a windfall for the government.
Bailey and another attorney took their compensation and expenses from sales of shares in the company. The government later accused Bailey of treating the shares as his own, benefitting from the stock’s rapid appreciation and using them to cover more than his expenses and fees. The government argued that he was supposed to be holding the shares in trust for the government. Bailey insisted there was no such agreement.
In the absence of anything in writing, the dispute went to a federal judge who jailed Bailey for 44 days in 1996 until the lawyer could borrow enough money to satisfy the government’s demands for return of the stock. Bailey did not prevail in a suit against the government challenging its actions.
His long running fight over the issue ultimately contributed to his disbarment in both Florida in 2001 and Massachusetts, for among other things, “offering false testimony, engaging in ex parte communications, violating a client’s confidences, violating two federal court orders, and trust account violations, including commingling and misappropriation,” as the Florida Supreme Court wrote.
He petitioned unsuccessfully for admission to the Maine Bar in 2013, a decision ultimately upheld after an appeal process that reached the Maine Supreme Judicial Court in 2014.
He is no longer able to practice law as a result.
The IRS also was pursuing Bailey for unpaid taxes, including, it argued, money resulting from his handling of the pharmaceutical shares.
Bailey, representing himself in the U.S. Tax Court, won some points but lost the battle with the IRS, and now faces, he said, a $5 million debt, in part through the buildup of interest and penalties.
“This is a case that began in 1993,” Bailey said from his home in Yarmouth. “Here we are 2016 and they’re still piling up interest at 12 percent a year.”
He said he offered a compromise settlement with the IRS but “they turned it down. You can refuse an offer to settle a tax case because a taxpayer’s a celebrity. Did you know that? That’s the only reason I was given … He’s a celebrity. The case would look bad for us if we accepted this offer.”
“It all stems from the old DuBoc case,” Bailey said, “which had me thrown in jail for not turning over all the money I had made in connection with fees for a druggie. The fact is I brought the government a total of over $50 million they wouldn’t have otherwise gotten.”
Bailey, a former U.S. Marine Corps pilot, was at one point a wealthy man, who owned airplanes, wrote best-selling books, hosted a television program and collected large fees from representing plaintiffs in liability suits, like a teenager in Wisconsin killed by a moving van on her way to the prom.
Bailey said he runs a small consulting business, lives by the water not far from Portland and is generally content.
Asked how he felt about his misfortunes, Bailey said: “You know when they let me out of prison, the press came around and said ‘don’t you feel humble, don’t you feel sorry for yourself that this judge socked you away?’ I said look ‘I cried because I had no shoes until I met a man who had no feet.’ So I’m in top shape. If you’ve landed an aircraft on an aircraft carrier in the middle of the ocean, there’s very little to fear in life.
“It’s not over yet.”