Guerin, Daugerdas Sidekick, Pleads Guilty (9/14/12)

Yesterday, Donna Guerin,  Paul Daugerdas' sidekick and fellow defendant, pled guilty to a conspiracy (18 USC §371), here, and tax evasion (26 USC §7201), here,.  The plea agreement is here;  excerpt key parts of the plea agreement below.  Each count has a maximum incarceration of 5 years; so the maximum sentence is 10 years.  She also agreed to forfeit $1.6 million.

She and Daugerdas were convicted of conspiracy and evasion in a much publicised trial last year.  The conviction was reversed for juror misconduct.  Which put them back in the queue for another trial.

I think it is important the good Judge Pauley asked her in the plea hearing whether she "she knew she was acting illegally when she helped draft opinion letters justifying tax shelters," to which Guerin responded "I came to that understanding over time.”  That's a standard line of inquiry at plea hearings as the judge assures himself that the client is really admitting the crime to which she is pleading.  But, because the crimes involved require specific intent to violate the law, it is important to know when she came to that understanding.  If for example, she had come to that understanding before the conspiracy was completed and before the conduct to which she pled in the evasion count, then she is guilty of the crimes to which she pled.  If she came to the understanding that the conduct could be a crime later, then she is not guilty of the crimes pled.  Until and unless the intent is present and coupled with conduct driven by that intent, there is no crime; conduct only coupled with subsequent intent is not a crime (I know that is an oxymoron, but I hope you get the point).  If  she only came to that knowledge of illegality, for example, after she was indicted, it would seem that there is no crime.  Maybe this issue was fleshed out after she gave that response or is addressed in the plea agreement.

The Agreement addresses the Sentencing Guideline factors as follows:

• 36 base offense level "because the offense charged in Count One involved an aggregate tax loss of more than $400,000,000."
• 2 level enhancement under S.S.G. § 2T1.1 (b )(2) for "sophisticated means"
• 2 two level enhancement under S.S.G. § 2Tl.9(b) because she intended to encourage others persons than herself and co-conspirators to violate the law.  [JAT question:  it is unclear who this refers to.  If it were the taxpayers, did they violate the law independent of the conspiracy; perhaps it is their tax evasion referred to in which case it would signal that, perhaps, at least some of the taxpayers may be guilty of a crime, perhaps evasion or tax perjury.] 
• The Part 2 offense level is 40.  There is a separate calculation for the grouped offense of evasion, but the grouping makes that calculation irrelevant.
• The potential for a 3 level enhancement for role in the conduct as manager or supervisor is deferred.  (As noted below, however, since the counts of conviction max the sentencing range which is already way above the counts of conviction, this would be a moot exercise.)
• The Government agrees to acceptance of responsibility up to 3 level downward adjustment.  This is despite that she earlier went to trial.  "Nothing in this Agreement limits the right of the Government to seek denial of the adjustment for acceptance of responsibility, see U.S.S.G. § 3El.l, regardless of any stipulation set forth above, if the defendant fails clearly to demonstrate acceptance . of responsibility, to the satisfaction of the Government, through her allocution and subsequent conduct prior to the imposition of sentence."  (Again, what difference does it make, except, perhaps cosmetically as to whether the judge may Booker vary downward.)
• The indicated Guidelines range is 292-365 months, but the maximum sentence on the counts of conviction is 120 months, so the Guidelines range is 120 months.
• Right to request a Booker downward variance uner 18 USC 3553(a).

Then the agreement provides:

Similarly, nothing in this Agreement limits the right of the Government to seek an enhancement for obstruction of justice, see U.S.S.G. § 3C1.1, regardless of any stipulation set forth above, should it be determined that the defendant has either (i) engaged in conduct, unknown to the Government at the time of the signing of this Agreement, that constitutes obstruction of justice or (ii) committed another crime after signing this Agreement.

For reasons already noted, It is what any enhancement might do.  She is already at 120 months, the maximum; adding enhancements will not affect the sentencing, except as it affects Judge Pauley's inclination to Booker vary..

The parties agree in effect not to appeal any sentence of 120 months or less.  (As noted above it can't be more, so no party will appeal.)

I have a number of Daugerdas blog entries, many of which related to Guerin.  For all such blogs, see here.

EXCERPTS FROM THE PLEA AGREEMENT

On the understandings specified below, the Office of the United States Attorney for the Southern District of New York ("this Office") will accept a guilty plea from Donna Guerin ("the defendant") to Counts One and Eight of the above-referenced Indictment, charging her with violations of Title 18, United States Code, Section 371 (Count One), and Title 26, United States Code, Section 7201 (Count Eight). 

Count One charges the defendant based on her involvement, between in or about 1994 and 2005, in a conspiracy to defraud the United States, commit tax evasion, and engage in a wire fraud scheme, all in connection with the design, marketing, implementation, and defense of fraudulent tax shelters while acting as a partner ofthe Altheimer & Gray law firm and a shareholder of the Jenkens & Gilchrist ("J&G") firm. Count Eight charges the defendant with tax evasion with respect to the tax liabilities of a client of J&G, who, during the 2000 tax year, engaged in a tax shelter transaction marketed and implemented by J&G and others. Count One carries a maximum sentence of 5 years' imprisonment, a maximum term of 3 years' supervised release, a maximum fine under 18 U.S.C. § 3571(d) ofthe greatest of $250,000, or twice the gross pecuniary gain derived from the offense, or twice the gross pecuniary loss to the United States, and a mandatory $100 special assessment. In addition, the Court must enter an order of restitution pursuant to Title 18, United States Code, Sections 3663, 3663A, and 3664, as a result of pecuniary losses to the United States, in the form of any unpaid taxes and interest, stemming from the conspiracy offense charged in Count One. 

Count Eight carries a maximum sentence of 5 years' imprisonment, a maximum term of3 years' supervised release, a maximum fine under 18. U.S.C.. § 3571(d) ofthe greatest of $250,000, [*2] or twice the gross pecuniary gain derived from the offense, or twice the gross pecuniary loss to the United States, a mandatory $100 special assessment, and costs of prosecution. The defendant also stipulates and agrees that, pursuant to Title 18, United States Code, Section 3663(a), the Court may impose an order of restitution as a result of pecuniary losses, if any, to the United States, in the form of any unpaid taxes and interest, stemming from the tax evasion offense charged in Count Eight. The total maximum term of imprisonment on Counts One and Eight is 10 years.  

The defendant admits the forfeiture allegation with respect to Count One of the Indictment and agrees to forfeit to the United States $1,600,000, pursuant to 18 U.S.C. §§ 981(a)(l)(C) and 982(a)(2)(A), and 28 U.S.C. § 2461, which constitutes or is derived from proceeds traceable to the commission of the offense in Count One (the "Money Judgment"). 

 * * * * 

In consideration of the defendant's plea to the above offenses, she will not be further prosecuted criminally by this Office, and, with respect to tax offenses, the Tax Division, Department of Justice, for any crimes related in any way to (i) her participation in a conspiracy to defraud the United States, commit tax evasion, and commit wire and mail fraud, all in connection with the design, marketing, implementation, and defense of tax shelter transactions while acting as a partner [*3] at the Altheimer & Gray law firm and a shareholder at the Jenkens & Gilchrist law firm, including substantive offenses stemming from the aforementioned conspiracy; (ii) the filing of a tax return for the tax year 2007 in which Donna Guerin sought a credit based on the claim of right doctrine; and (iii) any and all financial crimes related to her tenure at Altheimer & Gray and Jenkens & Gilchrist, and any economic or financial dealings with co-defendants and co-conspirators described in the Indictment. In addition, at the time of sentencing, the Government will move to dismiss with prejudice any open Counts against the defendant. This Agreement does not provide any protection against prosecution except as set forth above. The defendant agrees that with respect to any and all dismissed charges she is not a "prevailing party" within the meaning of the "Hyde Amendment," Section 617, P.L. 105-119 (Nov. 26, 1997), and will not file any claim under that law. 

[*6]  

It is further understood that this Agreement does not bind any federal, state, or local prosecuting authority other than this Office and, to the extent set forth above, the Tax Division, Department of Justice.

OTHER RESOURCES:

The Tax Prof Blog has links to other resources:  Former Jenkens & Gilchrist Partner Pleads Guilty After Winning New Trial in Tax Shelter Fraud Case (Tax Prof Blog 9/14/12), here.  Hat tip to Tax Prof Blog.