Feds say media mogul Kevin Adell owes taxes on his father's estate, demand sale of mansion

Detroit media mogul Kevin Adell has the federal government on his back, threatening to sell his Bloomfield Hills mansion, alleging he not only owes property taxes to Oakland County, but $17.8 million in estate and gift taxes to the feds stemming from his inheritance.

In a civil action filed Monday in U.S. District Court, the federal government sought a court order to sell Adell's $3.7 million home, and to enforce federal tax liens against the house.

According to the government, Adell inherited and oversaw much of his father's estate in 2006 following his father's passing, but transferred it before paying estate and gift taxes owed to the government. The government alleges Adell owes $9.7 million in unpaid estate taxes, and $8.1 million in unpaid gift taxes.

The government says it is suing Adell in his capacity as the personal representative of the Adell Estate, as appointed by his late father's will and by the Oakland County Probate Court.

Adell's media holdings include radio, TV and The Word Network

"Public records indicate that Kevin Adell has failed to make required property tax payments to Oakland County forthe subject properties," prosecutors allege in the filing, noting Adell still lives at his late father's house, off and on.

Adell, who owns The Word Network, 910 AM Superstation and WADL-TV Detroit, scoffed at the government's allegations, especially the bit about the feds wanting to sell his house. He maintains the home is in a trust.

"That’s my house," Adell said in a telephone interview from an airplane. "I don’t know how you sell a house that’s in a trust. That doesn’t make any sense whatsoever."

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As for claims that he owes millions of dollars in gift and estate taxes, Adell said those are old claims covered by the statute of limitations.

"It’s not accurate," Adell said of the government's narrative. "Eventually, it will get worked out. They want to embarrass me to pay. But my house — it’s been in a trust since 2005 when I bought it. I’ll work it through."

He also disputes owing taxes stemming from his father's estate.

"It's not my tax. It was my dad's tax," Adell said.

Adell is the son of Franklin Adell, who, following his death in 2006, left behind a nearly $33 million estate. During his lifetime, he owned several businesses, including a 100% interest in STN.Com, a cable satellite company that broadcasts The Word Network, which calls itself the "largest African American religious network in the world."

Adell says the government has come after him before

According to the group's website, Kevin Adell and his father co-founded the Southfield-based network in 2000, and have since made it available in more than 200 countries.

According to court records, a few years after starting The Word Network, Franklin Adell created a trust and named his three children as the beneficiaries. Over the years, he transferred many of his assets to this trust, including his 100% interest in STN.Com.

His son, Kevin, was eventually appointed trustee of the Adell Trust and personal representative of the Adell Estate —a title that would eventually bring legal headaches.

According to Adell, the government once went after him for $100 million in alleged taxes owed on his father's estate. But, he said, he won that case and didn't pay anything. He has been down this road before, he said, adding he expects this latest legal snafu to resolve in his favor.

But he doesn't understand why the government thinks it can sell his house — an 8,451-square-foot, New England colonial that includes five bathrooms, four bedrooms, tennis courts, a pool and stone courtyard terrace.

According to the government, the house was purchased by the Orchard Lake Property Trust in 2005 for $3.7 million. It was Franklin Adell who had established this property trust one year prior to his death, and he was the settlor of the trust when he died in 2006.

The Orchard Lake Property Trust is now owned by the Adell Estate — which Adell disputes — and Kevin Adell lives there for at least part of the year, says the government, noting there is no mortgage owed on the house.

But there are debts still tied to the house, it says, and Adell needs to pay up.

Feds: How Kevin Adell slipped up

According to the government, on Nov. 13, 2017, after receiving a filing extension, Kevin Adell filed an estate tax return with the IRS that reported $15.2 million in taxes owed.

One month later, the secretary of the Treasury assessed a $15.2 million tax against the Adell Estate — as reported on the tax form — plus penalties and interest.

A payment followed.

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The Addell Estate paid the government $8 million, and elected to defer payment for the remaining $7.1 million over five years.

But the obligation was not fulfilled, the government says.

According to court records, the Adell Estate made only two payments — and they were interest only: a $240,000 payment in 2008, and $170,000 in 2009. No more payments followed.

In 2014, the government says, the Adell Estate defaulted on its deferred estate tax.

'Knowingly and willfully failed to pay' estate taxes

An IRS audit followed, with the government sending Kevin Adell a notice of deficiency, concluding the Adell Estate owed more estate taxes.

In 2011, the Adell Estate sought intervention in U.S. Tax Court, which seven years later determined the estate owed a balance of $4.3 million, without interest and penalties.

"The Adell Estate has submitted no voluntary payments toward its unpaid estate tax liabilities since May 2009, and an unpaid balance remains," government attorneys state in the civil filing, adding: "At the time of Franklin Adell’s death, the Adell Estate had sufficient assets to fully pay the estate tax it owed but failed to do so."

Moreover, the government alleges: "Kevin Adell dissipated the Adell Estate’s assets and knowingly and willfully failed to pay the estate tax liabilities the Adell Estate owed to the United States."

On Nov. 17, 2008, Kevin Adell filed a Gift Tax Return on behalf of the Adell Estate that reported $2.8 million in gift taxes owed.

According to the government, Franklin Adell gifted Kevin Adell $6.6 million to pay a court-ordered legal judgment that was entered against the son. The IRS ran an audit and determined that the Edell Estate owed an additional gift tax of $71,000.

The Adelle Estate did not appeal the IRS’s finding, the government says.

However, it adds: "The Adell Estate has never submitted any voluntary payments toward its unpaid gift tax liabilities."

"At the time of Franklin Adell’s death, the Adell Estate had sufficient assets to fully pay the gift tax it owed but failed to do so," the government writes, adding: "Kevin Adell dissipated the Adell Estate’s assets and knowingly and willfully failed to pay the gift tax liabilities the Adell Estate owed to the United States."

As of Sunday, "the unpaid balance of the gift tax against the Adell Estate, including interest and penalties, was $8.1 million," the government alleges.

The government says it generally has 10 years from the date of an assessment to bring a proceeding in court to collect unpaid tax liabilities. But, it notes: "Although the IRS assessed the estate tax against the Adell Estate more than 10 years ago, the Adell Estate’s election to defer payment of the estate tax liability ... suspended the collection statute of limitations from the assessment date until the Adell Estate defaulted on its deferred estate tax payments. "

The government says Kevin Adell dissipated all assets owed by the Adell Estate, other than the Orchard Lake Property Trust, which holds title to the Bloomfield Hills house.

"At the time of Franklin Adell’s death, the Adell Estate had sufficient assets to fully pay the amount of estate tax reported owed," government tax attorneys argue in their filings. But, they add: "Since 2006, Kevin Adell dissipated the Adell Estate’s assets and knowingly and willfully failed to pay the estate tax liabilities that he knew" were owed to the government.

"The United States is entitled to a judgment that Kevin Adell is personally liable to the United States," federal tax attorneys Daniel Caves and Forrest Young argue in their filing, adding the government "has a right to enforce the federal tax liens against" the Bloomfield Hills house, and to have it sold in a judicial sale.

Contact Tresa Baldas: tbaldas@freepress.com

This article originally appeared on Detroit Free Press: Feds: Detroit broadcaster Kevin Adell owes for father's tax bill