So, today, I bring something that is mainstream but unusual. A lawyer has pled guilty to two counts of failure to file income tax returns and two counts of failure to pay income tax. The USAO SDNY press release is here. The maximum sentence when these 1 year counts are stacked is 4 years. (The Sentencing Guidelines range will sure indicate a fulsome sentence.) The lawyer is not just any lawyer -- he was a partner during most of the years that he failed to file tax returns with a very prominent law firm, Sullivan & Cromwell LLP (website here). He is John J. O'Brien, formerly a partner specializing in mergers and acquisitions at Sullivan & Cromwell LLP.
The guts of the press release (cut and paste) is :
From 2000 through 2009, O’BRIEN was a partner at a major Wall Street law firm with offices in New York City, where he handled corporate mergers and acquisitions. The Law Firm provided O’BRIEN and other partners an IRS Schedule K-1, which reported each partner’s share of the Law Firm’s income, deductions, and credits. Accompanying the Schedule K-1, the Law Firm’s accountants annually sent a cover letter explaining that the information reported on that form should be used to file individual tax returns. The Law Firm also requested that all partners complete a certification form indicating that he or she was in compliance with all income tax requirements. O’BRIEN was aware of that policy but never completed the certification form during this period.Article:
For the tax years from 2001 to 2008, O’BRIEN willfully failed to file returns, notwithstanding the Law Firm’s effort to ensure partners were in compliance with the law. He received over $10.8 million in partnership income during that period, and owed over $2.5 million in taxes. Instead, O’BRIEN used the funds for various personal expenses, including the purchase of a weekend home, international travel, and the funding of a rare books business.
Chad Bray, Ex-Sullivan & Cromwell Lawyer Charged With Failing To Pay Taxes (WSJ Law Blog 8/4/11).