Former Jenkens & Gilchrist Attorneys, Former BDO Seidman CEO, and Deutsche Bank Broker Found Guilty of Multi-Billion Dollar Tax Fraud Scheme
Four tax and banking professionals were convicted on May 24, 2011 in Manhattan federal court for their roles in a tax shelter scheme, sending a clear message that dishonest tax professionals will be held accountable for their crimes. The verdict found former Jenkens & Gilchrist attorneys Paul M. Daugerdas and Donna M. Guerin, former BDO Seidman CEO Denis M. Field, and Deutsche Bank broker David Parse guilty of designing, marketing, and implementing fraudulent tax shelters used by the wealthy to avoid paying taxes to the IRS. According to the Justice Department, Daugerdas, Guerin, and Field collectively made $130 million in profits from the 10-year scheme.
According to the evidence, the defendants”who are all certified public accountants”undertook to prevent the IRS from detecting their clients use of the tax shelters. The defendants also created and assisted in creating transactional documents that fraudulently described their clients motivations for entering into the tax shelters. The entire scheme lasted from 1994 through 2004 and made the defendants millions of dollars in fees, commissions, and bonuses. Daugerdas, Field, and Parse also utilized the tax shelters for themselves to evade tax liabilities for their illicit income. For example, Daugerdas used the shelters to cut his tax liability on his $95 million income from over $32 million to less than $8,000.
Chief of IRS-Criminal Investigation Victor S.O. Song stated,
Promoting and marketing tax shelter transactions intended to conceal the true facts from the IRS isnt tax planning; its criminal activity. People trust their attorneys and Certified Public Accountants to hold the highest standards when dealing in financial transactions. Todays conviction reinforces or commitment to every American taxpayer to identify and to prosecute those who devise illegal tax shelters.
The Justice Department reported that Daugerdas, Guerin, and Field were all convicted of “conspiring to defraud the IRS to evade taxes, and of corruptly endeavoring to obstruct and impede the internal revenue laws,” in addition to mail fraud and multiple counts of tax evasion. Parse was convicted of mail fraud and obstructing internal revenue laws. The defendants face prison time and, for all counts except mail fraud, fines of the greater of $250,000 or twice the gross gain to the defendant or twice the gross loss to the IRS. Sentencing is scheduled for October 14, 2011.
Several other defendants implicated in the case have already pleaded guilty. At least four additional defendants are former BDO partners or executives. In December 2010, Deutsche Bank agreed to pay $553,633,153 to the United States in connection with the transactions engineered by the defendants.
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