Denise Rich Renounces U.S. Citizenship, Will Save Tens Of Millions In Tax Dollars
Reuters | Posted: 07/09/2012 6:59 am Updated: 07/09/2012 11:46 am
* Move could save Rich tens of millions of dollars in long haul
* New York penthouse up for sale for $65 million
* Wrote songs for Aretha Franklin, Jessica Simpson
By Lynnley Browning
July 9 (Reuters) - Denise Rich, the wealthy socialite and former wife of pardoned billionaire trader Marc Rich, has given up her U.S. citizenship - and, with it, much of her U.S. tax bill.
Rich, 68, a Grammy-nominated songwriter and glossy figure in Democratic and European royalty circles, renounced her American passport in November, according to her lawyer.
Her maiden name, Denise Eisenberg, appeared in the Federal Register on April 30 in a quarterly list of Americans who renounced their U.S. citizenship and permanent residents who handed in their green cards. ()
By dumping her U.S. passport, Rich likely will save tens of millions of dollars or more in U.S. taxes over the long haul, tax lawyers say.
Rich, who wrote songs recorded by Aretha Franklin, Mary J. Blige and Jessica Simpson, is the latest bold-faced name to join a wave of wealthy people renouncing their American citizenship. Facebook co-founder Eduardo Saverin gave up his U.S. passport to become a citizen of Singapore, an offshore tax haven, before the company's initial public offering in May.
Nearly 1,800 citizens and permanent residents, a record since data was first compiled in 1998, expatriated last year, according to government figures.
Rich, who was born in Worcester, Massachusetts, has Austrian citizenship through her deceased father, said Michael Heidt, a lawyer in Hollywood, Florida, who represented her in a recent lawsuit.
He said Rich had dumped her U.S. passport "so that she can be closer to her family and to Peter Cervinka, her long-time partner." Rich's two daughters live in London; Cervinka, a wealthy property developer, is an Austrian national. Rich plans to make London her main residence and does not intend to acquire other passports, Heidt said.
MARC RICH's PARDON
Rich's ex-husband, commodities trader Marc Rich, fled the United States in 1983 when indicted on charges of tax evasion, fraud, racketeering and illegal trading of oil with Iran. They divorced in 1996.
Marc Rich received a presidential pardon in 2001 on President Bill Clinton's last day in office. Federal prosecutors and Congress investigated the pardon, and in 2002 a House of Representatives committee concluded Denise Rich had swayed the action through donations to the Clinton library and campaign.
Dubbed "Lady Gatsby" by Yachting magazine, Rich owns multiple properties, including a mansion in Aspen, Colorado. She is a frequent habitue of Cannes, Monte Carlo and St. Tropez with celebrities and singers aboard her 157-foot yacht, Lady Joy.
Rich will escape future U.S. taxes but possibly not all current ones. In 2008, Congress imposed an expatriation tax on persons with a net worth of more than $2 million who dump their U.S. citizenship or permanent residency. Under the law, those people owe an "exit tax" on their worldwide property, computed at a fair market value the day before they leave. But tax lawyers say the tax can be reduced or avoided by structuring asset holdings through foreign annuities.
While Austria, like the United States, generally taxes its citizens on their worldwide income, it has generous tax breaks for citizens who spend half the year abroad.
In January, Rich put her 5th Avenue penthouse in New York on the market for $65 million, according to the listing agent, The Corcoran Group. New York property records show Rich acquired a 100 percent stake in the apartment, described by Corcoran as "the epitome of luxury and grandeur," for $200,000 in 2006. Bonnie Evans, the Corcoran broker for the property, declined to discuss details.
COOK ISLANDS TRUST
The recent lawsuit against Rich was filed on behalf of Lee Goldberg, the former protector of a Cook Islands trust of which Rich is a beneficiary, in February. The case was dismissed in April, court records show.
The Cook Islands, a South Pacific tax haven, offers Swiss-style secrecy for wealthy investors.
The lawsuit accused Rich and Richard Kilstock, a British real estate entrepreneur who is married to Rich's daughter Daniella, of "transferring, moving or secreting trust assets, in violation of the trust's guidelines and without the knowledge or permission of Goldberg."
Rich and Kilstock denied the charges and accused Goldberg of altering trust documents, court filings show.
Both Goldberg and his attorney, Donald Thomas, declined to discuss the case. Rich recently dismissed Goldberg, one of her long-time lawyers, as protector of the trust.
Heidt, who also represents Kilstock in the case, declined to discuss the lawsuit. Kilstock did not return calls requesting comment.