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October 4, 2011 3:06 PM

Ex-Seyfarth Shaw Partner Barred from Promoting Tax Shelters

Posted by Brian Baxter

CORRECTION: 10/4/11, 5:08 p.m., EDT. A previous version of this story misstated elements of Beal's case in the seventh paragraph. That paragraph has been revised to include the correct information. We regret the error.

John Rogers, a former Seyfarth Shaw tax partner who now has his own practice in Chicago, has been prohibited by a federal judge from offering clients tax shelters that the government claims improperly reduce the income of U.S. taxpayers.

The U.S. Department of Justice announced late Tuesday that it had reached an agreement on the entry of orders against Rogers and two companies he represents—Sugarloaf Fund LLC and Jetstream Business Limited—that allegedly serve as tax shelters peddling junk foreign debt to U.S. clients.

Rogers, a founding partner of Chicago's John Rogers & Associates, does not admit any wrongdoing under his agreement with federal prosecutors. That agreement requires him to turn over to the government the names of everyone he has sold the distressed asset debt and trust shelters to since 2003. 

The Justice Department sued Rogers in November 2010 for using the tax shelters, which specialized in Brazilian debt to create tax deductions for Rogers's U.S. clients. Federal prosecutors claim the tax deductions are bogus and cost the government more than $370 million.

Rogers, who represented himself in the proceedings, referred to the Justice Department orders themselves when contacted by The Am Law Daily for comment on the resolution of the case. (Click here, here, and here for copies of the injunctions against Rogers, Sugarloaf, and Jetstream, which prevent Rogers from promoting them to potential clients.)

As previously reported by The Am Law Daily, Rogers joined Seyfarth as a nonequity partner in 2003 after his previous firm, Chicago-based Altheimer & Gray, dissolved. He became an equity partner at Seyfarth in 2004, and subsequently told the firm that he was being investigated by the IRS for promoting the Brazilian tax shelters to clients, but vowed to stop using them.

Wealthy Americans have used shelters like those set up by Rogers to seek lucrative tax breaks. Forbes reported this week that Texas banking billionaire Andrew Beal recently saw a $1.1 billion tax shelter nixed by the U.S. Court of Appeals for the Fifth Circuit. The Fifth Circuit did rule that Beal was not liable for penalties because he had good reason to believe the shelters—which were not blessed by Rogers, a Harvard Law School graduate—were legitimate.

Rogers left Seyfarth in 2008 after the firm confronted him about his continued use of different versions of the shelters being probed by the government. A Seyfarth spokesman did not immediately respond to a request for comment on the matter Tuesday.

Gregory Seador and Nathan Clukey, trial attorneys with the Justice Department's tax division, handled the case for the government.

Tax lawyers from Am Law 200 firms have come under increased scrutiny during the federal government's crackdown on tax cheats over the past few years. Former Jenkens & Gilchrist partners Paul Daugerdas and Donna Guerin were found guilty by a federal jury in May for their roles marketing illegal tax shelters to clients, while ex-Arnold & Porter partner Paul Cinquegrani avoided prison in another tax shelter scheme last year.

In November 2009, former Miller, Canfield, Paddock and Stone partner John Campbell was sentenced to five years in prison for conspiring to sell fraudulent tax shelters. That came seven months after ex-Sidley Austin partner Raymond "R.J." Ruble received a six-and-a-half-year sentence for his role blessing bogus tax shelters created for wealthy clients.

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As the Forbes article correctly reports, Beal was not a client of Rogers.

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