PORTLAND, Maine — Former defense attorney and Yarmouth resident F. Lee Bailey has again filed for bankruptcy, this time to create a payment plan to resolve a final bit of federal tax debt from the dispute that eventually ended his legal career.
Bailey on Monday filed for Chapter 13 bankruptcy, which allows a person who has a steady wage to create a payment plan with creditors. The filing in Maine bankruptcy court will allow Bailey to discharge certain debts he could not rid himself of through the personal Chapter 7 bankruptcy he filed last year.
Bailey’s attorney in the most recent case, James Molleur, said Bailey resolved his personal IRS debt through the earlier bankruptcy filing, but the federal government retained liens on some of his property that could not be discharged in that case.
“The purpose of the second case is to pay the value of that lien over time, so that Mr. Bailey will be finally free of collection efforts from the IRS,” Molleur said.
The prominent defense attorney reached the peak of his career by defending football player O.J. Simpson, who was acquitted on murder charges in the high-profile 1995 trial. He represented a number of other prominent defendants, including the Ohio physician Sam Sheppard, whose story inspired the film “The Fugitive.”
Bailey moved to Maine in 2010.
Molleur said he estimates the IRS liens on Bailey’s property are worth about $100,000, but the government could dispute that as federal officials previously estimated their secured claims against Bailey at around $600,000. In total, Bailey owed the IRS about $5 million.
Bailey’s initial filing in the Chapter 13 case does not detail his debts, but states he has assets worth between $100,000 and $500,000 and debts between $1 million and $10 million. The IRS lien affects property such as Bailey’s condominium in Yarmouth.
Those debts all stem from a decades-long dispute over Bailey’s handling of client assets in a 1994 drug smuggling and money-laundering case. Bailey agreed to take over his client’s shares in a pharmaceutical company and place them in a Swiss bank account in his name, in a deal with prosecutors.
Bailey and another attorney took their pay from the sale of those shares, which had increased significantly in value, but the government argued they were due those proceeds. Bailey argued that was not the deal.
The charges that Bailey treated the shares as his own landed him in prison for 44 days until he could satisfy government demands to return the stock. The IRS separately pursued Bailey for $5 million owed on unpaid taxes from his handling of those pharmaceutical shares, which Bailey unsuccessfully challenged in U.S. Tax Court.
The case led to his disbarment as an attorney in 2001, in Florida and Massachusetts, and he since has tried to return to practicing law. In 2013 he was denied admission by the Maine Bar, a decision Bailey unsuccessfully challenged in 2014. Bailey runs a consulting business out of Yarmouth.
Earlier this year, he expressed a continued interest in resurrecting his legal practice. After the death of prominent Maine defense attorney Dan Lilley, Bailey told WCSH that he and other colleagues were looking over Lilley’s cases. Bailey does not have a license to practice law.