Members of The Chi-Lites appeared in court today (May 8, 1976), where they pleaded guilty to tax evasion.
The group had been arrested earlier in the year in January, and released on $2500 bond over their delinquent tax bills, which stretched back as far as 1972.
The tax troubles came during an investigation of Brunswick Records’ executives, who were being accused of paying radio stations, in return for valuable airplay (payola).
The judge took it relatively light on The Chi-Lites, issuing a $5,000 fine per- head, as well as sentencing them to a year’s probation.
According to Chi-Lites founding member Eugene Record, the tax ordeal was a result of record label troubles.
“There was a complete breakdown of just about everything,” Eugene Records said in the book “Chicago Soul.”
“Our company was in trouble with the government, and when the IRS came into the company they begin looking at the artists as well,” Eugene Record explained. “We felt management was partly responsible for what happened to us. I’m not saying a personal manager should take you to the bathroom and all that, but if you are on the road as we were, you can’t do some things. We were on the road so much between 1969, when we started touring, and 1976, that a couple of those years we were away for at least 300 days each. That’s how much we worked.”
Group member Marshall Thompson agreed with Eugene Record, and stated that they just did not have enough business savvy managers around them at the time.
“We needed business agents, we needed business accountants, but we didn’t have that at the time,” Marshall Thompson stated. “Hey, we came off of 43rd Street! Somebody tells you, ‘Here’s $100,000, just put it in your pocket and go crazy.’ So that’s what we did, went crazy, went out and bought Cadillacs, whatever, the money was coming in so fast.”