Capital Losses

For an athlete who makes his living on the ice, Jaromir Jagr spends a lot of time in hot water. In August the IRS filed a lien against the Capitals wing, saying he owed about $350,000 in taxes for 1999, when he played for the Penguins and earned $10 million. According to his management agency, IMG, Jagr satisfied that debt as soon as he learned of it. Then on Feb. 28 the IRS filed a lien stating that the Czech native, now in the second year of a seven-year, $78 million contract, owes about $3.3 million in taxes for 2001. And these aren't the first financial missteps for the 31-year-old Jagr. Several years ago he owed more than $500,000 to an Internet gambling company.

A source who was close to Jagr when the five-time scoring champ played for Pittsburgh says Jagr gambled mostly on football. There is no indication that Jagr bet on hockey—a violation of NHL rules that would be punishable at the commissioner's discretion—but his losses are laid out in a June 2000 agreement with a Belize-based gambling website called CaribSports. A document obtained by SI shows that Jagr proposed making nine monthly payments of $37500 and one lump-sum payment of $112,500, a total of $450,000, after the site's owner, William Caesar, discounted his debt Jagr, who got a line of credit from the site in '97, made several payments, then stopped, according to Caesar, who says he then made little effort to collect for two years. Last April, as a way to pressure Jagr to pay, Caesar leaked the story to buzzdaly.com, a webzine that covers the gambling industry. He says he immediately received "a little more than 20 percent" of the balance from Jagr's lawyers—an amount he says he accepted as the final payment.

Jagr's lawyers maintain that Jagr did not make all the bets himself because a friend had used his password. Caesar says he had technicians configure Jagr's betting page so he could not wager on NHL games. "We did that for our own protection, not just his," Caesar said. "That would destroy us, if he destroyed the game."

On Monday, Jagr declined to comment on either the gambling or the tax matters, referring questions to IMG, which handles his contract but not his finances. IMG also would not discuss the gambling but issued a statement to SI claiming the tax lien was filed for "underestimation of tax withholding and a disqualified write-off," and added, "The taxes for 2001 will be resolved within the time line and procedures dictated by the IRS."