Bumble & Bumble Founder Gets Stung by IRS

A warning to all entrepreneurs…Uncle Sam wants his cut of your take. US prosecutors last week arrested Bumble and Bumble Founder Michael Gordon, charging that helied about failing to pay taxes on $29.6 million he received after selling his stake in the company.


Bumble and Bumble is now owned by Estee Lauder.


Authorities said in court documents filed last week that Gordon, an English-born hairdresser who oversaw Bumble and Bumble’s rise from an unknown salon to an international brand, had reported only his regular income — about $1.3 million — on his 2006 tax returns. Instead of paying taxes on the sale proceeds that year, he reported he was owed a tax refund of $39,298.

When an Internal Revenue Service agent confronted him in October, the agent wrote in a court affidavit, Gordon, 61, said he had not known his tax forms failed to mention the sale income. But the agent, Eric Nieves, said he had found a confidential informer, described in the affidavit as a personal acquaintance of Gordon’s, who said that Gordon “was actively seeking ways to hide the money from the I.R.S.,” including sending it overseas, and ignored the acquaintance’s warnings that this was considered tax evasion.

Investigators arrested Gordon last week at his Manhattan apartment, said Robert Nardoza, a spokesman for Christopher Caffarone, the assistant US attorney prosecuting the case. Mr. Nardoza said that Mr. Gordon was charged with lying to a federal agent, but he declined to comment further on the case, according to The New York Times..


Gordon was held after his arrest because a judge deemed him a flight risk; he agreed to a bond secured by $4 million in property and was released on Thursday.