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May 25, 2011 6:44 AM

Former Jenkens Attorneys Found Guilty in Multibillion Dollar Tax Fraud Scheme

Posted by Ed Shanahan

By Mark Hamblett-From the New York Law Journal

Former Jenkens & Gilchrist partners Paul Daugerdas and Donna Guerin were found guilty by a federal jury on multiple counts for their role in a massive, illegal tax shelter scheme.

In the second week of deliberations, the jury in Southern District Judge William Pauley's courtroom delivered guilty verdicts against Daugerdas and Guerin, along with former BDO Seidman CEO Denis Field and banker David Parse, formerly of Deutsche Bank Alex.Brown. The jury acquitted Raymond Craig Brubaker, a former Deutsche Bank Alex.Brown banker, on all nine counts against him.

The verdict was a huge win for the prosecution team of Southern District Assistant U.S. Attorneys Stanley Okula, Jason P. Hernandez, Katherine Failla, Rachel Kovner and Nanette Davis, who presented evidence of a conspiracy to devise, market, and sell tax shelters with no economic substance and provide wealthy clients with paper losses that saved them hundreds of millions of dollars in taxes.

From the opening argument in the 10-week trial, the prosecution explained to the jury that the opinion letters were the key to the successful marketing of shelters to clients who needed legal cover if and when the Internal Revenue Service came calling.

Hernandez quoted Field during opening arguments as saying to colleagues they would be "swimming in a river of green" if they were aggressive in selling the shelters.

In Daugerdas' defense, Chris C. Gair of Jenner & Block in Chicago told the jury the opinion letters were cleared by now defunct Jenkens & Gilchrist's top tax lawyer, Michael Cook of Texas.

Gair said it was the job of Daugerdas to find loopholes in the tax code, which is subject to a variety of interpretations.

For Guerin, Mark Rotert of Stetler, Duffy & Rotert in Chicago said, "In the law, everything's debatable," because of conflicting opinions.

For Field, Sharon L. McCarthy of Kostelanetz & Fink argued that he was merely the "head showman and marketer" of the shelters but that two members of the firm who handled day-to-day operations, and went on to testify for the government under cooperation agreements, kept Field in the dark on crucial matters.

The jury, which began deliberations on May 12, convicted Daugerdas, Guerin and Field of conspiracy, with the goal of defrauding the United States and the IRS, committing tax evasion, mail and wire fraud. Parse was acquitted on that charge.

Daugerdas was convicted on 18 counts of tax evasion for work he did for clients, Guerin on nine counts, and Field on four counts. Parse was acquitted on three counts of tax evasion. All four were found guilty of mail fraud and a corrupt endeavor to obstruct and impede the Internal Revenue Laws. Daugerdas was also convicted of three counts of personal tax evasion.

Parse is represented by Susan Brune, Theresa Marie Trzaskoma and Laurie Edelstein of Brune & Richard.

Brubaker is represented by Barry Berke and Paul Schoeman of Kramer Levin Naftalis & Frankel.

Sentencing is scheduled for October 14.

 

RELATED STORIES FROM THE AMERICAN LAWYER


Ex-Jenkens Lawyer Paul Daugerdas Indicted for Tax Fraud
The American Lawyer
June 9, 2009

Helter Skelter
Some buyers of tax shelters from Paul Daugerdas say he represented both the buyers and sellers--and they want their money back.
The American Lawyer, December 5, 2003

 

 

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