It was reported on Wednesday in a South Florida newspaper that Michael “The Grinder” Mizrachi is facing tax issues and has already had real estate property seized by the U.S. Government in an effort to settle those tax problems.
In the Fort Lauderdale Sun Sentinel, reporter Nick Sortal revealed that Mizrachi was facing payment of a significant amount of back taxes to the Internal Revenue Service. From the time period of 2005 to 2007, the feds allege that Mizrachi failed to pay the proper amount of taxes, resulting in the IRS filing a lien against “The Grinder” to the tune of $339,711. According to Sortal’s story, the government has also taken action against Mizrachi by foreclosing on real estate property he owns and auctioning it off.
Sortal states that the government foreclosed on a condominium located in Hollywood, Florida that was jointly owned by Mizrachi and his brother, Robert Mizrachi, and sold it through an online auction on Wednesday. In 2005, the two brothers jointly bought the condo for $310,000 and were using it as a rental property. According to the Sun Sentinel, Mizrachi stated, “People weren’t paying their rent and we were advised that the best thing to do was foreclose.”
Another property owned by Mizrachi was also foreclosed on by the government and will be sold at auction next week. The property, a home in the Vizcaya neighborhood of Miramar, was purchased in 2005 for $440,000. According to the Sun Sentinel article and court records, there is still $367,359 owed on it. All totaled, Mizrachi invested a minimum of $750,000 in the two pieces of real estate; he is also one of the latest victims of the real estate collapse, as the two properties were assessed earlier this year at less than half of their purchase value, Sortal writes.
In a follow up to the article, Sortal was contacted by Mizrachi’s tax attorney, Steven Chung. Sortal writes that Chung said, “Mr. Mizrachi is a victim of the real estate collapse and the recent recession. We are working to resolve his current situation which was caused by the negligence of his previous professional advisors. We appreciate that several of his creditors, including the Internal Revenue Service, have been understanding and flexible… We request that the public respect Mr. Mizrachi’s privacy so he can focus on bringing an exciting game of poker.”
Sortal brings up in the Sun Sentinel article that Mizrachi also was active in “swapping” pieces with other players in the poker community. The practice of “swapping,” where a player puts up a percentage of another player’s buy-in and earns that percentage back when a player cashes in a tournament, is something commonly done by poker players to hedge their expenses. The problem with the practice, as is known by poker players and pointed out by Sortal, is that the tax burdens go entirely to the winning player and the person who is on the other end of the “swap” doesn’t have any taxes taken from his piece. Mizrachi admits to Sortal that he engaged in this practice and estimates that of the approximately $6.7 million he won from 2004 to 2007, approximately $3.7 million went to backers and “swapping” deals.
From 2005 through 2007, Mizrachi was one of the top players in the game. After signaling the presence of a new star in the poker world by earning $325,000 in 2004, Mizrachi exploded in 2005 by finishing fifth at the World Poker Tour’s (WPT) Jack Binion World Poker Open in Tunica and winning the WPT’s L.A. Poker Classic slightly less than a month later. The two final tables earned “The Grinder” slightly over $2 million and pushed Mizrachi to cash seven times at the World Series of Poker (WSOP) that year.
In 2006, Mizrachi once again pulled off the same feat when he finished second in the same Tunica event and, barely two weeks later, won the WPT Borgata Winter Open in Atlantic City. Those two final tables earned him over $2.2 million and helped drive him to the 2006 WPT Player of the Year award. Since then, however, Mizrachi has experienced a drop-off in earnings at the tables, earning $335,686 in 2009 and only $7,485 to this point in 2010. According to the HendonMob Database, Mizrachi has $7.1 million in tournament earnings in his career.
