Former New York Knick and Atlanta Hawks center Randolph Morris has failed to convince a federal judge to suppress statements he made during a FaceTime conversation with two IRS special agents while he was in China and they were in the kitchen of his Kentucky home.
In a ruling Friday from the U.S. district court in Lexington, Kentucky, Chief Judge Danny Reeves denied Morris’ motion to suppress evidence gathered during the intercontinental conversation on Sept. 12, 2018. The main reason: It was Morris’s idea to use FaceTime, and he was free to end the call.
Morris’s legal woes stem from allegations he failed to pay taxes on income earned while playing for the Beijing Ducks of the Chinese Basketball Association. According to a criminal indictment, the former University of Kentucky star earned $13.3 million in salary and bonuses from the Ducks between 2010 and 2017. During that stretch, Morris was a teammate of Stephon Marbury and won the finals’ Most Valuable Player award. Morris, who played in the NBA between 2007 and 2010, bought a home in Lexington, Ky., in 2010 and established residence there. Morris has pleaded not guilty and denies any wrongdoing.
Like other states, Kentucky taxes the income of its residents regardless of where that income is earned. The state, the indictment stresses, “does not provide an offset or credit for any foreign taxes paid by a Kentucky resident toward that resident’s tax liability incurred as a result of earning income in a foreign country.”
Morris faces 11 felony charges, three for wire fraud and eight for willfully making false statements on tax returns. If convicted on all charges, he’d face a maximum prison sentence of more than 80 years. However, Judge Reeves wouldn’t sentence a first-time offender to such a lengthy term. More likely, the judge would run the sentences concurrently. Still, Morris could spend several years behind bars.
According to prosecutors, Morris prepared his own tax returns using H&R Block’s online tax preparation program. The use of that program, coupled with (allegedly) not reporting foreign income, spawned interstate wire fraud: the program’s server was in Kansas, and Morris transmitted his returns to the Kentucky Department of Revenue. The fraud charges pertain to Morris’s tax filings in 2015, 2016 and 2017. During that time, he reported $0 in foreign income yet earned $6.7 million from playing in China. He allegedly should have paid $402,760 in taxes to Kentucky.
Robert Raiola, the director of the sports and entertainment group at PKF O’Connor Davies, says Morris’s case serves as a warning to U.S. players abroad. “Players have to be careful to not assume that just because their foreign team pays taxes to another country, that it relieves them of the burden to report that same income to their state and the U.S.”
Morris’ troubles began, court documents indicate, when special agents drove to the player’s Kentucky home hoping to interview him, but no one answered the doorbell. They left a business card at the front door. Morris says the agents also questioned landscapers about his whereabouts.
After driving to a local restaurant, one of the agents called Morris’ cell phone and left a voicemail. Morris called the agent back and explained that he was in a hotel in China for basketball reasons. Morris suggested the agents drive back to the house, where his wife, Andrea, would use her cell phone to call him on FaceTime.
When the agents returned, Andrea Morris was waiting on the porch. The three went into the kitchen where the agents were on one side of a counter while Andrea was on the other. An 80-minute interview was then conducted. It was around midnight in China.
About halfway through, the image of Morris froze, and the audio kept cutting out. According to court documents filed on behalf of Morris, he could not see the agents due to persistent technical difficulties. The group then continued using Talkatone, an audio app. Morris says that app was also “cutting in and out.”
Sportico has obtained the FBI agents’ memorandum of the interview.
Morris explained to the agents that the Ducks paid his taxes to China. Each year, Morris said, he signed two contracts with the Ducks. One indicated a higher amount that included the tax amount paid by the team, while the other showed the lower, post-Chinese-tax amount wired to his bank account.
Morris acknowledged being “aware of the fact that U.S. citizens are required to report all income from all sources worldwide.” Morris also thought that “he report[ed] a correct figure for his Chinese earned income on his U.S. tax returns.”
Morris was asked why, if he knew he had to report his Chinese income, he had not done so. According to the memo, Morris replied “he didn’t know income earned in China should be reported here because it would be double taxed.” The agents noted the inconsistency in Morris’s explanation since earlier “he stated he knew U.S. citizens needed to report worldwide income from all sources.” Morris, the memo asserts, then “answered that he didn’t know income received in China was his responsibility to report to the U.S.”
The interview, as summarized by an IRS agent, provides important evidence for prosecutors: Morris (1) admitted his awareness of the need to report income from China and (2) supplied conflicting and contradictory responses as to why he failed to do so.
Patrick Mullin and other attorneys for Morris argue the agents violated his Fifth Amendment right against self-incrimination. They describe the interview as an “interrogation” and contend Morris couldn’t see the agent’s credentials. The agents also neglected to mention they were conducting a criminal investigation until the end.
Further, Morris wasn’t given a Miranda warning, meaning notice he had a right to remain silent, a right to consult an attorney before the questioning and a right to have an attorney appointed. Miranda warnings are required in custodial interrogations unless waived by the accused.
As Morris’s attorneys see it, their client was in custody since a reasonable person in the same situation wouldn’t have felt at liberty to end the interrogation.
“While Mr. Morris was working in China at the time,” Morris’s attorneys argue, “this was nonetheless a frightening and disturbing situation to him, as he was concerned about the Agents’ conduct and communications with his wife and his landscapers.”
Also, though Morris invited the agents, the invitation came at the behest of the agents, who went so far as to visit his house to find him. The agents, Morris’s attorneys insist, also knew they were likely to elicit incriminating responses since they were asking about his bank accounts, tax filings, knowledge of tax requirements and earnings. “The average citizen,” Morris’s attorneys further point out, “does not know that IRS Special Agents are a part of the criminal division of the IRS.”
Lastly, the attorneys say that Morris was suffering from jetlag “after travelling through 12 time zones less than a week prior.” They also noted the late hour and that “the Agents’ contact was wholly unexpected and the Agents were alone in Mr. Morris’ secluded home with his wife while he was overseas.”
Judge Reeves rejected Morris’ arguments. He reasoned that “Morris was not in a custodial environment but was in a hotel room thousands of miles away from the agents with whom he was speaking.” The judge also concluded that Morris was at liberty to end the call. He further noted that “it was Morris’s idea to conduct the interview in this manner”—thus the interview was voluntary—and that “at no time did the agents block [Andrea Morris’s] path to exit the room.”
The judge added that the discussion was “cordial” and that, while Morris now claims to have suffered from jet lag, one of the agents “testified that Morris’s memory did not seem foggy and that he gave answers that were responsive to questions that contained very particular details, such as names of people, dates, and dollar amounts.”
The case continues in litigation. No trial date is yet set. Morris, 35, most recently played for Sporting Al Riyadi Beirut of the Lebanese Basketball League.