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More money, more problems

TAXING TIMES: Lauryn Hill has been handed a three-month sentence over her financial troubles

GRAMMY-WINNING singer Lauryn Hill’s three-month sentencing for failing to pay around £650,000 in taxes has made her the latest black superstar to become entangled in financial woes.

As the multi-platinum selling artist learned of her impending imprisonment, the question being asked is “How did she get into this mess?”

Well, in Hill’s case, she failed to pay taxes on more than £1.17 million earned from 2005 to 2007.
But rather than attempting to tackle the problem, she laid the blame for her financial situation on slavery.

“I am a child of former slaves who had a system imposed on them,” Hill said at her court hearing last week. “I had an economic system imposed on me.”

Hill isn’t the first entertainer to face the music.

Hollywood actor Wesley Snipes was released from prison last month having served two years for tax evasion, despite earning a reported $37m (£24m) between 1999 and 2004.

EARNINGS

Former world heavyweight champion boxer “Iron” Mike Tyson is estimated to have racked up to over £200m in earnings, knocking out virtually every opponent he faced in a blistering 19-year career.

However, in 2004, the New York Times broke the news that the Brooklyn-native was £15m in debt, owing £11m to both the US and British governments in taxes, £489,000 to seven law firms and £195,000 for limo services.


LOCKED UP: Wesley Snipes was imprisoned for evading taxes

This isn’t just an issue for our American counterparts; there is a long list of black British actors, singers and sportspeople who have also fallen into financial hot water.

But as the cases of actor Burt Reynolds, President Thomas Jefferson, musician Willie Nelson and footballer Lee Hendrie, among many others suggest, it would be wrong to identify celebrity financial problems as a “black” issue.

Former US President Benjamin Franklin coined the term: “The only things certain in life are death and taxes.” On many occasions it seems that the latter is the most problematic.

Walk On By singer Dionne Warwick somehow managed to amass tax liability of almost £6.6m dating back to 1991, which included money owed to the American version of the HRMC, the Internal Revenue Service (IRS) and the rest in Californian business taxes.

Ostentatious lifestyle is one of the reasons that these stars go on a splurging spree – surrounded by agents, managers, publicists, bodyguards, assistants and other hangers - on who may or may not have their best interests at heart.

BANKRUPT

One-time MTV presenter and Top of the Pops host Richard Blackwood was declared bankrupt in 2007 and was evicted from his luxury £300,000 two-bed flat on London’s Isle of Dogs.

As Blackwood himself admitted in an interview with arts publication Ink Pellet, the flashy spending was great until the “phone stopped ringing” and the jobs dried up.

The same applies to former Popworld and T4 presenter Miquita Oliver, 31, who filed for bankruptcy in 2011 over an unpaid tax bill totalling £170,000.


CASH-STRAPPED: TV presenter Miquita Oliver filed for bankruptcy

When news broke, her publicist assured the Evening Standard that the star had “many projects in the pipeline both here and in the US.”

But despite a stint hosting the 2012 MOBOs and ongoing work with Channel 4 such as presenting 4Music’s Fresh Music Top 20, she has yet to regain the prominence she enjoyed in her early 20s.

That’s just it in the entertainment world. One day you’re hot and struggling to decide which Bentley or Ferrari to take for a walk that day. The next, you’re waving goodbye to your career. For some, it’s in the same 24 hours.

Conversely, barring the rare exception, workers in the business world tend to have an easier time of handling a seven-figure incomes and multi-million pound bonuses.

And this can be attributed mainly to the fact that most City boys (and girls) have had to work their way up the career ladder, where their salary has grown gradually – rather than the actor who went from £6 per hour waiting tables to a £1m contract as the new lead in an action blockbuster movie.

LINKS

One key issue for stars who find themselves with money troubles is having access to financial advisors, who can give them direction and help them manage their earnings.

Andrew Lewin, Wealth and Investment Management at Barclays, said: “Entertainers can earn substantial wealth over a short period of time. They can get a big break and success can happen very quickly. My advice would be for entertainers to seek advice. Many (entertainers) are not used to having to use that sort of money. It's incredibly important to carefully plan how to use the money as soon as possible. Also, individuals need to be aware of the potential risks of investment.”

He added: “Diversifying your investment portfolio is key because it spreads the risk of losing money and it's particularly risky to have all your money in just one area."

But there are many cases where scammers and unscrupulous people tend to get richer off gullible celebrities.

Bernard Madoff, also known as Bernie, the former American stockbroker scammed thousands of individual investors, including Hollywood actress Zsa Zsa Gabor, major corporations in a £32bn fraud scheme.

Big earners become targets for fruitless entrepreneurial ventures, shoddy investment projects and eagle-eyed gold diggers.

This tends to match well with strong self-belief - some say, ego – and talent-based wealth, rather than business nous, leaving them open to thinking they will excel in anything they do.
Former Premier League footballer Jason Euell fell into bankruptcy in January 2011, after he claimed he was swindled in a property venture.


BANKRUPT: Footballer Jason Euell fell on hard times

To make it worse, the former Charlton striker and Jamaica international, who is estimated to have earned £6m in his 16-year-career, found out his signature had been forged on documents after the business failed.

At the time, Euell, told The Sun: “Six years ago I invested in a property company with a friend of mine, which due to a number of factors in the last year has failed.”

Aspiring showbiz millionaires and billionaires need not be scared, as there are those who have maintained their wealth and, even, increased it.

Retired heavyweight boxer Lennox Lewis was listed as one of the richest Britons in the 2013 Sunday Times Rich List, published in April,with a net value of £95m – mainly thanks to lucrative sponsorships and real estate investment.


WINNING: Boxer Lennox Lewis is one of Britain’s wealthiest people

Then there’s Croydon-born supermodel Naomi Campbell who has shown the entrepreneurial brains to match any City slicker, building a global brand worth more than £30m.

And of course for more than three decades broadcast journalist Oprah Winfrey has moulded herself into a world-renowned TV personality and now a billionaire media mogul.

Hopefully, the lessons of those who have fallen into financial trouble will be heeded by the next generation of black entertainers and can only be helped by plans to introduce personal finance lessons in schools across England.

Starting in September 2014, budgeting and borrowing are to become a compulsory part of the secondary school curriculum, with pupils learning about money management in maths and citizenship lessons.

But in most cases, the simplest answer is usually the best.

And in the words of many a parent, “money doesn’t grow on trees.”

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