The trial of a former University of Kentucky basketball star started Monday with attorneys disputing whether or not Randolph Morris deliberately avoided paying taxes on $13 million in foreign income.
Federal prosecutors argued in court Monday that the former All-SEC basketball player deliberately avoided telling accountants and the federal government about the money he was making in China. He allegedly failed to report more than $13 million in income he received playing basketball for the Beijing Ducks. That resulted in about $4 million in evaded taxes, prosecutors said Monday.
The Foreign Tax Credit would have reduced that amount to about $1.5 million if Morris had filed his taxes properly, prosecutors said. In addition to the federal money that allegedly went unpaid, Morris is also charged with avoiding about $400,000 in taxes owed to Kentucky.
“He didn’t report any of it,” federal prosecutor William Moynahan said of money Morris made from 2010 to 2017 in the Chinese Basketball Association.
Morris’ attorney told jurors that Morris didn’t intend to skirt his responsibility for paying those taxes. Rather, he misunderstood his contract and wasn’t helped enough by people he entrusted as a young man, attorney Patrick Mullin argued.
“This guy’s a basketball player,” Mullin said in court Monday. “He’s not an accountant.”
Morris faces three charges of wire fraud and eight charges of making false statements, according to court records. If found guilty, he could face up to 20 years in prison for each wire fraud charge and three years in prison for each of the false statement charges.
Moynahan said the “key question” in Morris’ trial is how his returns ended up showing no income received from overseas.
Attorney: Taxes unclear in former UK star’s contract
The wording of Morris’ contract with the Ducks was a major point of contention in court Monday. His 2010-11 season contract had a provision that said Morris’ $600,000 salary was his “net” take-home pay. The team was responsible for paying the taxes he owed to the Chinese government. The contract didn’t say anything about Morris’ responsibility to pay taxes in the United States.
“A fair reading of that provision leads one to believe that the player’s taxes will be handled by the team,” Mullin said in court.
Prosecutors pointed out the contract provision stated the Ducks would handle Morris’ taxes in China, not in the United States. Morris was a U.S. resident and bought a home in Lexington around the same time he went to China for his first season with the Ducks, according to court records.
Moynahan said in court Monday that Morris had properly filed his tax returns in the past. He also said Morris reported his foreign income when it benefited him, such as when he needed a mortgage for the home he bought in Lexington.
Kimberly Sampson took the witness stand Monday as a former employee at the company Morris used to file his taxes. She helped him file his returns in 2008 and 2009. In those years, Morris was playing in the NBA and properly filed his taxes, according to court testimony.
In 2010, Morris emailed the accounting firm, notifying it he was playing basketball in China, Sampson testified. Morris sent Sampson a copy of his contract and a tax certification from the team.
The tax certification stated that the team handled all of Morris’ taxes owed in China, according to court records. It didn’t say how much the team had paid for Morris’ taxes. The certification also didn’t mention U.S. taxes. Sampson said she needed to know how much tax Morris paid in China to help file his U.S. taxes.
Mullin pointed out that Morris had asked the accounting firm to help him get a better understanding of a tax treaty between the United States and China. Mullin said the treaty was supposed to help prevent overtaxation for people working in one of the countries and living in the other.
Sampson said to the best of her knowledge, no one ever got back to Morris when he asked about the tax treaty. Employees at the accounting firm weren’t well versed in international tax issues, but someone at the firm had spoken to an international tax expert about it, Sampson said.
Prosecutor: Morris kept people ‘in the dark’ about his income
Sampson said she never prepared Morris’ tax forms for 2010. He didn’t give the firm all the needed information and he went to another firm for help.
Moynahan said Morris went to a new accountant “he could intentionally keep in the dark” about his overseas income.
Morris’ next accountant, Miranda Aavatsmark, also took the stand Monday. She said Morris provided her tax documents for the 2010 year, including a W-2 from the Atlanta Hawks. But he didn’t bring any documentation of his Beijing Ducks salary, she said.
Aavatsmark, who attended UK, said she’d heard of Morris but wasn’t a big sports fan. She didn’t know he played pro basketball in China until she searched his name on Google. She called him after looking him up and asked if he had any Beijing Ducks income that he needed to report. He told her he wasn’t getting paid by the Ducks until 2011, she said.
Mullin questioned whether or not Aavatsmark asked Morris if he had any other source of income when he submitted his W-2 from the Hawks. She said she assumed the Hawks organization was his employer.
Mullin also questioned whether or not the accountant had an obligation to send Morris something in writing to confirm his claim that he wasn’t being paid by the Ducks until 2011. She said she didn’t.
Morris went to an H&R Block in Lexington to file his taxes for his 2012 return, prosecutors said. He again evaded being honest about his foreign income, investigators alleged. He went to a different H&R Block and did the same thing for 2013, prosecutors said. He then filed his taxes himself after that.
The tax preparers were the first of several witnesses set to take the stand in Morris’ trial. Prosecutors said they planned to bring in state and federal tax officials, including agents who investigated Morris’ alleged tax crimes and interviewed him.
Morris was in China when federal agents interviewed him in 2018. The agents were at Morris’ Lexington home with his wife and they interviewed Morris over the phone, prosecutors said. He allegedly changed his story about whether he was aware that he was required to report foreign income on his taxes, prosecutors said.
Morris, originally a standout basketball player from Houston, played at UK from 2004 to 2007. He then played for the New York Knicks and Atlanta Hawks in the NBA before going to China to play in 2010.
While playing in China, Morris teamed up with Stephon Marbury to win league championships with the Ducks in 2012, 2014 and 2015. He was the Chinese Basketball Association’s Finals MVP in 2014.
Morris played in Lebanon with Sport Al Riyadi Beirut as recently as 2019.