Monday, June 26, 2006 | Vincent Sennen Garcia seemed to have the dream job. He surfed the waves off of the coasts of Fiji, Australia, South Africa, France, Spain, Portugal and Brazil, pulling in hundreds of thousands of dollars in prize money for his efforts.
There was only one problem: He failed to report $161,450 in cash and traveler’s checks to the Internal Revenue Service in 2000.
“Sunny” Garcia, a surfing legend and Rancho Santa Fe resident, pleaded guilty to tax evasion earlier this month and faces up to three years in prison. He is a victim, some said, of professional surfing’s simpler, more informal days. And the potential incarceration of one of the industry’s biggest names could force some surfers to pay more attention to their business affairs.
“I believe that Sunny is a victim of the early stages of professional surfing, when athletes did not have the appropriate guidance from their sponsors, they did not have a manager, and most of the time, did not even have an accountant to look after their earnings and legal papers,” said Renato Hickel, a tour manager for the Association of Surfing Professionals World Championship Tour.
Back when the 35-year-old Garcia first started surfing professionally two decades ago, the industry was much more informal than it is now. Competition organizers simply handed out cash to winners. But as surfing competitions have become more commercial, that practice has largely been abandoned.
All WCT winners, for example, now receive prize money through bank transfers. Some lower-tier competitions still hand over cash to winners right at the venue – a practice that might contribute to the participants’ accounting difficulties.
“It was a bit messy in the past even at WCT level,” Hickel said. “It was harder for surfers to keep track of their earnings, especially when you consider the amount of money they had to spend to attend such events.”
Garcia, a native of Hawaii, belongs to an older generation of surfers. He first competed at the age of eight and, according to various news reports, is a mix of Hawaiian, Mexican, Filipino, Chinese, Puerto Rican and Irish descent.
A world-renowned surfer, Garcia won the Vans Triple Crown Surf Contest six times and became world champion in 2000. He starred in “Boarding House,” a reality television program featuring professional surfers. Garcia is also known in the surf world for his erratic behavior and short fuse in and out of the water.
He started his first world tour at age 16. He dropped out of high school to turn pro and was ranked among the top of the sport by the age of 18.
Michael Willis, a big wave legend and surfing expert, said that while the surfing industry has certainly matured, those who started out young might not fully understand their tax responsibility.
“Sunny Garcia was very young,” Willis said. “Maybe his family wasn’t business-oriented and he never understood the full scope of his responsibilities.”
Garcia admitted making false statements on his 2000 income tax return and failing to report prize winnings of $161,450 in cash and traveler’s checks collected during overseas competitions. During his plea, Garcia also admitted failing to report another $244,635 in income between 1996 to 2001, according to documents released by the U.S. Attorney’s Office.
Garcia owed the federal government an estimated $66,822 in 2000. He owed approximately another $50,000 for 1996, 1997, 1998, and 2001 combined, according to the plea agreement. Along with possible prison time, Garcia is also facing a possible $100,000 fine. Judge Thomas J. Whelan will sentence him Aug. 28.
Garcia announced last year he was leaving the world tour after 20 years. Throughout his career, he pulled in approximately $1 million in prize money.
Hickel said professional surfers spend 10 to 11 months out of the year traveling around the world, making it difficult for some to keep track of all their prize winnings. The Association of Surfing Professionals follows the rules and regulations of each country in which events take place, Hickel said. Each surfer has the responsibility to comply with the tax laws of their country.
“Amongst the surfers, I’m sure many of them are talking with their accountants to make sure they are OK with the tax man,” Hickel said.
Kenneth Hines, the special agent in charge for the San Diego Office of Internal Revenue Service Criminal Investigation, said all athletes like Garcia must keep track of and report all prize money or endorsements received in other countries.
“The same rules apply for all citizens,” Hines said. “It was Mr. Garcia’s responsibility to report his income worldwide. We hope that everyone voluntarily tells us everything, but this is what results when someone tries to be deceptive.”
While Hines declined to comment on the specifics of the case, he said that in criminal investigations, individuals possibly committing tax fraud are identified through informants, banks, credit unions and IRS records.
“All the IRS asks is that everyone be honest in reporting their income,” Hines said. “There are situations when people make honest mistakes, like forgetting to put down something, but it becomes criminal issue when someone uses deceptive means to defeat the IRS from uncovering certain income.”
Garcia’s lawyer, Steven Toscher, did not return several calls seeking comment.
Hickel said the surfing world is changing and surfers are becoming more aware of their tax responsibilities and hire managers to take care of their business affairs.
“Surfers are much more prepared and orientated by their sponsors and most of them have managers taking care of their careers,” Hickel said. “I’m sure cases like Sunny’s will open the eyes of the ones that are not taking proper care of their business.”
Willis said that what happened with Garcia is a good lesson for everyone in the industry.
“Sunny is a person in leadership position and he has the responsibility to rectify the situation,” Willis said. “Hopefully, he can get it organized, make it right and carry on.”