Innocent Spouse (6 page)

“Of course, as his will is written, with you as the sole heir, the case is now your responsibility,” Mr. Namarato said. “You are the defendant.”

I froze. It was difficult enough to comprehend the trouble Howard was in, but almost impossible to absorb the shock of being told that his mess, whatever it was, was now my mess. I felt like I was in a slow-motion car crash. This was crazy. I hadn’t done anything wrong. How could I be the defendant in anything?

“At one point we were afraid Howard would be indicted,” Mr. Namarato said. He’d been a criminal tax enforcement official at the Justice Department. “But we were able to clear that up. They didn’t have a strong enough case for a criminal indictment.”

The blood rushed from my face. My throat went dry. I kept hoping that Howard would walk through the door and tell me everything would be okay.

“Did Howard know that?” I asked.

“Yes.” Mr. Namarato folded his hands on the papers in front of him. “That was decided before the end of the year.”

“Then does that mean the case is closed?”

“No,” he said. “We got rid of the criminal charges but we’ve got a long way to go. There’s still the debt and the penalties. This case is attractive to the IRS because it’s a big number.”

My composure cracked. My voice was thin and barely audible. “Big number? What does that mean?”

“We don’t know the final number, but it’s large.”

“How large?”

“In the millions,” Mr. Namarato said. “We don’t yet know how many.”

I couldn’t swallow. I had the same sinking feeling I’d had in the intensive care unit at Sibley Hospital. There I learned I could lose my husband. Here I was being told that I could now lose everything else. My fear very nearly flared into panic. I had nowhere to turn. I was on my own, and the other lawyers and the accountant all chimed in to tell me what to do, as I felt the panic rising.

“Sell everything,” one of them said with such mindless gusto that I wanted to grab a tire iron and whack him. I didn’t have that option at hand, but the anger helped quell the panic. “Pay the debt and get this behind you.”

“If I sold every last thing—and I mean everything—home, apartment, the boat, the cars, books, clothes, art, toys, knickknacks, and my wedding ring—I wouldn’t be able to come up with millions of dollars,” I said.

“Where’s the money?” Mr. Casual Friday asked me, as if I’d robbed a bank and stashed the goods.

“What do you mean, where’s the money?” The needle on my fight-or-flight gauge was now moving sharply toward fight.

“There must be money somewhere,” he said. “He had to do something with the money. Is it in offshore accounts?”

Offshore accounts? These people were his lawyers, for God’s sake! Wouldn’t they have known if there were offshore accounts? Wasn’t that their job? Obviously they didn’t know Howard.

“Howard didn’t hide money,” I said. “He spent it. He liked to spread it around. He didn’t want his money stashed on an island somewhere. He wanted it close, and available.” The room was suddenly quiet.

I finally worked up the courage to ask the question I wanted most not to think about: “What happens if I can’t pay?”

That certainly got everyone’s attention. It was clear they’d never considered that possibility. I looked at them. They looked at one another and then back at me. I could hear the hum of the ventilating system. Martin Gray tapped his pen on the table. Someone cleared his throat. Finally, Julie, the only woman there from the firm, broke the silence. “Well, you could go for ‘innocent spouse.’ ”

“What’s ‘innocent spouse’?” I asked.

“It’s a code in the tax law that’s designed for cases where a spouse who has committed, say, fraud, dies, but the surviving spouse doesn’t know anything about the fraud. The surviving spouse can be declared innocent. When that status is awarded, the surviving spouse is absolved of responsibility for the debt.”

That’s it! Thank God. That’s the solution! Before I could open my mouth, Julie added, “But you wouldn’t qualify.”

“What? Why not? I
am
innocent.”

“Because …” She paused, gathered her breath, then poured it out in a rush: “You had to know. How could you not know? Look at you!”

Look at me?
Look
at me? I wrapped my arms around myself. I could feel the cloth of my expensive black suit but I felt naked and exposed.
I felt like I was a criminal in the dock, charged with a crime I knew nothing about.

“But I
didn’t
know,” I said. “The only thing Howard told me was he was being audited and that the lawyers told him not to talk to me about it. So he didn’t. You were his lawyers. You must have told him that.”

They nodded but offered nothing else. I felt that in their eyes I was as guilty as my husband. Mr. Namarato said they would have better information in a couple of weeks, when we would reconvene. In the meantime I should start to get my house in order.

I walked out of the office building back onto the same street and into the same daylight that was there when I arrived, but everything was different. The numbing fog of widow’s grief that had been present when I got up and dressed that morning was gone, replaced by blunt fear. I was hollow inside except for dread. My hands shook. Before starting the car I had to take a few deep breaths to calm down, to focus. For the first time in my life I felt trapped. And Howard, the very person I always went to, who would listen and understand and give me good advice and protect me, he was gone, too, leaving me to fight his tax fraud case. He left me in a minefield of his making. The irony that the very man responsible for this mess was the same man I yearned to run to didn’t hit me then, but it did soon enough.

The IRS agent on the case was a woman named Deborah Martin. “She’s a junior agent,” Mr. Namarato explained. “That’s why she’s so eager to get a big dollar amount. This is huge for her.”

Deborah Martin submitted her report on April 16, 1997, the day I returned to the lawyers’ office. I knew the damage done by my earlier appearance—the widow in the Chanel suit—couldn’t be undone and only emphasized the image of me as a coconspirator in a tax fraud, the client who “had to know.” This time I was the one who dressed casually.

Deborah Martin, I was surprised to discover, was not present. When I asked about meeting her, Cono Namarato’s response was swift. “No. We’ll keep you away from her. No contact. That’s what we’re here for.”

It was becoming clear that my lawyers viewed me as precisely the person Deborah Martin described in the opening of her report. I was
a woman living a “lavish” and “luxe” lifestyle. Almost all the elements of my life she took to be incriminating. When she cited her damning evidence, it didn’t matter that I didn’t know we couldn’t afford the life we lived. I drove a Range Rover, for instance. Yes, I drove it. Still did. In fact, it was parked outside. I also had a weekday live-in babysitter and a weekend babysitter who doubled as a housekeeper. I had a demanding job, for God’s sake! And when we had a big dinner party I hired a cook who worked for a catering company. I thought we could afford it. It made sense to me.

And so it went. Deborah Martin’s report read like the tumescent tabloid profile of a frivolous, spendthrift airhead. That was not me. Everything she wrote was technically true, although highly embellished. It documented every dime Howard had spent in the past five years. All his credit card charges, all the checks, money he’d deposited, all his investments. She made our very comfortable but comparatively low-wattage life sound like high-rolling pornography costarring me and my son. According to Martin’s report, when I wasn’t off on a luxurious holiday, aboard a private jet or yacht, I sunbathed by the pool at my “estate” on the Chesapeake Bay while relying on my domestic staff to attend to my needs. That wasn’t how I saw my life but it was how a young IRS agent looking to make her first big haul chose to describe it. I thought we were living within our means. I didn’t pay the bills. I didn’t know that Howard couldn’t pay for the life we were living. My protests either didn’t register with my lawyers or simply sounded lame to them. They painted me with the same brush they’d used for coloring the guilty party, Howard.

Deborah Martin’s report explained how Howard ran his expenses through Nathans and thus operated the business at a loss. Essentially the only annual income reported was mine, which created a discrepancy of at least several hundred thousand dollars. While Howard withheld about two hundred thousand dollars in federal taxes from his employees’ paychecks, he didn’t send that money to the government. He kept it for himself, for Nathans, and for some favored employees. There was a section of the report that listed which employees got money “off the books,” with their names and the amounts documented because Howard had given them the money in checks, pink checks.

As I continued reading, each page of the report felt heavier than the
last. When I got to the part where it detailed that my husband wrote off the live-in babysitter’s wages as “trash collection” and some of my Christmas presents as “uniforms,” I stopped reading. I had reached my threshold of humiliation, embarrassment, shame, and guilt—and before an audience, too. Deborah Martin caught a man who had broken the law, who’d committed tax fraud against the U.S. government. It was as simple as that. The crook was my husband. It didn’t matter that he was ashes; the investigation stood on its merits and she had a case. The government wanted its money and since dead people don’t write checks, I would be the one to pay. I was the defendant.

Mr. Namarato slid a single sheet of paper across the polished table. It broke down what was owed. The debt to the feds came to almost $2.5 million, and the meter on interest and penalties was still running. The total was a breath shy of $3 million, an amount of money that was incomprehensible to me. Amounts owed to the District of Columbia and the state of Maryland hadn’t yet been calculated. I stared at the numbers, speechless, as the lawyers and accountant talked about my options. My inner voice begged: Don’t cry, don’t cry, not here, please don’t cry, not here, don’t cry, don’t cry.

“Well, she still has the issue of the promissory note.”

“We’re going to have to comb through that, but I don’t think it will fly.”

“The withholding is the big issue, and that’s where most of the debt is.”

“But we can try to flip that one issue with another.…”

“No, it won’t work.”

“I think we go back to Deborah and ask for some backup on a few of these numbers.”

“At least Carol has her job at CNN. That looks good.”

“You can’t take this into a courtroom. It’s a slam dunk against her.”

They debated while I sat there, invisible. No one asked my opinion. As the shock of the numbers wore off and I began to tune into the words of the lawyers, something inside me clicked, some little gear shifted from frozen to boiling.

“Wait!” I fumed. “Stop! Listen to me.” All eyes shifted in my direction. “I don’t understand any of this.” I gestured at the documents on
the table, the pages of evidence, and the numbers that toted up the debt. “And I don’t understand half of what you’re saying.”

They were silent.

I looked from one lawyer to the next. “Doesn’t anybody understand that I didn’t do this? They’ve got the wrong person. The person who did this is dead! This is all news to me. I found out only two weeks ago that we even
have
mortgages! There wasn’t anything about our lives that struck me as inappropriate. Yes, we lived well, but it wasn’t outrageous, it wasn’t ridiculous, it wasn’t gross and over the top. My husband had a successful business. He had an inheritance. It all made sense to me. There were no bags of money lying around the house, piles of cash stacked in the closets. There weren’t trips to Vegas. There weren’t shady characters. I’m to be condemned because I had live-in help for my son? I work! I’m allowed to have a babysitter. I can pay her. Is that criminal?”

I continued to fight back the tears. The last thing I wanted was to let these people see me crumble.

“I don’t know what Howard did,” I said, calmer now. “I hope that whatever it was, he didn’t do it on purpose, that it was a mistake. But I can’t ask him. He’s not here. But I do know this: I didn’t do it and my son didn’t do it. I’m innocent!”

There was silence. Finally, Mr. Namarato spoke up. “But you signed the tax returns.”

“I know, but they were filled out by an accountant.” I looked at the accountant, who looked away. “Why
wouldn’t
I sign them?” I asked. “I assumed they were properly put together. I didn’t feel I needed to pore over them.”

Martin Gray shifted in his seat and cleared his throat. “I was working with the numbers Howard provided me,” he said.

“So was I!”

“We’ve got a long way to go,” Mr. Namarato said, obviously trying to calm me down.

“What happens now?” I asked.

“We’ll talk to Deborah Martin,” Julie said. “They can put liens on your accounts. We’ll try to stop that. You should find out how much you can come up with. What if you sell your house? What will
you get for that? And the art? You have a lot of antiques, right? What would that add up to?”

“My house? Just sell it?”

“That’s one way of paying this off,” someone added.

“I want to keep my house.” It was our safe harbor. It was my little boy’s home.

“What about the life insurance?” one of the lawyers asked.

“There is no life insurance,” I said.

“What? How can that be?”

“Howard didn’t believe in life insurance,” I said. “Look, I only got him to sign a will a year ago. He didn’t want to do it because he thought it would jinx him, that he would die.…” I smiled weakly at the irony. “It looks like he was right.”

That was that. The meeting ended with a refrain of “We’ll make some calls and get back to you. We’ll meet again next week.”

Mr. Namarato casually wrapped his arm around my shoulder and walked me to the elevator. “Now, Carol,” he said, “don’t leave here depressed.”

Was he mad? All my worst fears had come true. Spencer and I were going to lose everything. Our lives would be ruined. I was beyond depressed.

That night I had a fitful sleep, but that I slept at all was probably the bigger surprise. What kept me awake was not simply the perplexing bad deeds my beloved husband had done, but the sheer magnitude of what had landed on us. There was my frightening ignorance of this dangerous new world of cash flows and taxes, criminal fraud and lawyers. I had to get sophisticated fast. Grief, I knew, would have to wait. Tears could come later. First, I had to save us.