Celebrity music manager Derrick Lawrence (47), pleaded guilty to tax evasion on Tuesday, March 11th in a federal court. Lawrence has yet to be sentenced but faces up to three years in prison.
With this year’s tax day (April 18th) looming nearer, another story has emerged from the music industry stressing the importance of proper preparation of one’s taxes as well as the repercussions for not paying them. Convictions of tax evasion range from “Regular Joes”, all the way up to the rich and famous. Over the years, celebrities such as Lauryn Hill, Wesley Snipes, Martha Stewart, Fat Joe and Nicholas Cage have either been jailed on tax evasion charges or had to pay a hefty fine to clear up their tax problems. Derrick Lawrence, most widely known for being Drake’s former manager, can now be added to the list of celebrities who have faced the music in court regarding their tax issues.
Lawrence is not a household name, but the artists that he has represented have made him a powerful force in the music industry. Lawrence co-founded Laurant Management, LLC, Aspire Music Group, LLC and Three Kings, LLC. Lawrence’s partners in these companies are fellow celebrity Music Managers Cortez Bryant and Gerald “Gee” Roberson. The trio struck a gold mine when they signed mega-superstar Drake to an exclusive recording agreement as well as a management agreement in 2008. At the time, the group also managed Lil Wayne and had a monetary stake in Young Money Entertainment.
Obviously, this musical pairing earned the company a large amount of money. In fact, New York Post reports that Lawrence individually made $591,612 in 2009, $652,174 in 2010 and $1,032,423 in 2011. The only problem is, Lawrence apparently did not pay any taxes on these profits. Therefore, Lawrence was charged with Tax Evasion and appeared in a Brooklyn New York Federal Court this week, his first appearance according to NY Daily News.
Although tax evasion is often reported in the media, very few individuals realize just how serious Uncle Sam takes this violation. Under U.S. Code § 7201 tax evasion is described as:
Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.
It should also be noted that the longer an individual goes without paying taxes, the more severe the penalty. Sometimes defendants are able to work out a payment plan with federal prosecutors and avoid imprisonment. Other times, jail, as well as restitution, are required.
A running theme in these celebrity tax evasion cases seems to be reliance on bad accountants. Similarly, Lawrence blamed his former accountant stating in open court; “I failed to pay my taxes, which I left in other people’s hands, which I realize was my responsibility.” Lawrence mentioned his busy travel schedule as a reason for inattention to his finances. However, according to DNAinfo Lawrence has also decided to take responsibility for his mistake. The music manager has agreed to pay more than $750,000 in restitution, which he has already started paying.
Presiding Judge Peggy Kuo may take this into consideration when a sentence is handed down on July 11. As per sentencing guidelines, the Judge could give him a maximum of three years in prison: one year for each that he stiffed the IRS. However, for the time being, Kuo allowed Lawrence, who has homes in Brooklyn and Florida, to keep his passport. However, he will need to ask the court’s permission to travel. Lawrence’s lawyer, Stacey Richmond, said her client isn’t a flight risk because “he has two children who are graduating this year.” Prosecutor Brendan King agreed saying, “Because of his business, he needs to be able to travel which is fine.”
It should be noted that this is not Lawrence’s first time in a court room. In 2012, Drake retained Robert S. Meloni as litigation counsel in order to either renegotiate or terminate the recording agreement he signed with Lawrence and his partners. Drake’s attorney claimed that Drake had fulfilled his recording obligations to the labels but did not receive any royalties whatsoever and that there was a blatant conflict of interest between the parties involved. Drake has since severed management ties with Cortez, Robertson, and Lawrence, although he’s still in an exclusive recording agreement with Aspire.