Disbarred lawyer F. Lee Bailey files for bankruptcy
Faced with a $5 million-plus debt to the Internal Revenue Service, disbarred lawyer F. Lee Bailey has filed for bankruptcy.
Bailey filed for Chapter 7 bankruptcy in Maine on Friday, report the Washington Post and the Portland Press Herald.
Bailey tells the Washington Post his only assets are a car worth less than $2,000, personal property worth less than $5,000 and a condominium. He owes about $365,000 on the condo mortgage, and he hopes to keep the property through a reaffirmation agreement, he tells the Portland Press Herald.
Bailey tells the Press Herald he wants to discharge the IRS debt because “at 83, it’s a little late to raise that kind of money overnight. It’s been a long battle.”
The tax debt stems from his alleged failure to report income on sales of stock he was supposed to hold in trust for a drug client as a result of a deal with prosecutors. He originally owed $1.9 million, but the IRS sought $4.5 million as a result of interest and penalties. As the interest continues to mount, Bailey now owes nearly $5.2 million.
The stock sales led to ethics troubles for Bailey. The government claimed he used $3 million from stock sales for his own purposes; Bailey had maintained he spent no more than the appreciated value of the stock that he was due for attorney fees. He was disbarred in Florida and Massachusetts, and his bid to practice law in Maine was rejected.
Bailey says the IRS debt can be discharged because he has complied with conditions that include filing and paying the rest of his taxes on time. He claims the IRS is refusing to settle because he is a celebrity and it would look bad.
Bailey was on O.J. Simpson’s “dream team.” He also represented Ohio doctor Sam Sheppard, who was originally convicted for murdering his wife. Bailey won a retrial because of the “carnival atmosphere” at the first trial. Sheppard was acquitted in the new trial. The television show and movie “The Fugitive” drew from the case.
Despite his fame, Bailey says, he never had a big bank balance. “I always assumed that the pile of gold, as soon as it got diminished, would be replenished, replaced by something else,” he told the Washington Post.
Related articles:
Forbes: “F. Lee Bailey Bankruptcy Rooted In Poor Record Keeping”
ABA Journal: “F. Lee Bailey loses his quest to practice law again after past misdeeds”
ABAJournal.com: “F. Lee Bailey loses bid for Maine law license; court notes he felt disbarment was ‘kind of harsh’ “
Updated June 30 to link to Forbes coverage.
