Friday, November 1, 2013

On Retrial, Daugerdas Convicted and Field Acquitted (11/1/13)

On retrial, Paul Daugerdas has been convicted of tax crimes related to his tax shelter activities.  In the same triial, Denis Field, former CEO of Seidman was acquitted.  See Nate Raymond, CORRECTED-Lawyer guilty, accounting firm CEO cleared in tax shelter case (Reuters 10/31/13), here.  Excerpts:
A federal jury in Manhattan convicted Paul Daugerdas, the lawyer, on seven of 16 counts including conspiracy, tax evasion and mail fraud following an eight week re-trial in his criminal case. 
But the jury acquitted Denis Field, the one-time accounting firm head, on all seven counts against him including conspiracy and tax evasion.
The USAO SDNY press release, titiled Jenkens & Gilchrist Attorney Found Guilty In Manhattan Federal Court Of Multibillion-Dollar Criminal Tax Fraud Scheme, is here.  Key excerpts from the press release are:
Preet Bharara, the United States Attorney for the Southern District of New York, Ronald A. Cimino, Deputy Assistant Attorney General for the Tax Division of the Department of Justice, and Richard Weber, the Chief of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today that PAUL M. DAUGERDAS was convicted in Manhattan federal court for his role in a tax shelter scheme in which he and his co-conspirators designed, marketed, and implemented fraudulent tax shelters used by wealthy individuals to avoid paying taxes to the IRS. The 10-year scheme generated over $7 billion of fraudulent tax losses and netted DAUGERDAS approximately $95 million in profits. DAUGERDAS was convicted following a seven-week jury trial, presided over by U.S. District Judge William H. Pauley III. 
* * * * 
From 1994 through 2004, DAUGERDAS, a lawyer, certified public accountant, and the former head of the Chicago office of the Jenkens & Gilchrist law firm (“J&G”) and its tax practice, participated in a scheme to defraud the IRS by designing, marketing, implementing, and defending fraudulent tax shelters. 
As part of the scheme, DAUGERDAS and others undertook to prevent the IRS from: (i) detecting their clients’ use of these shelters; (ii) understanding how the transactions operated to produce the tax results reported by the clients; (iii) learning that the shelters were marketed as cookie-cutter products designed to eliminate or reduce large tax liabilities; (iv) learning that the clients were not seeking profit-making investment opportunities, but were instead seeking huge tax benefits; and (v) learning that, from the outset, all the clients intended to complete a pre-planned series of steps that had been designed to lead to the specific tax benefits sought by the clients. DAUGERDAS and others created, and assisted in creating, transactional documents and other materials that falsely and fraudulently described their clients’ motivations for entering into the tax shelters and for taking various steps in order to yield the tax benefits. 
As a result of the scheme, the defendant and his co-conspirators made millions of dollars in fees and bonuses. Specifically, DAUGERDAS made $95 million in profits but used tax shelters to reduce the taxes he paid to less than $8,000; without the shelters, he would have owed over $32 million in taxes.
Lawyers for the Parties
The Defense: 
For Mr. Daugerdas:
Henry Mazurek, here.
Brian D. Linder, here.
Clayman & Rosenberg 
For Mr. Field:
Sharon L. McCarthy, here.
Kostelanetz & Fink
Cesar de Castro, here.
Cesar de Castro P.C. 
The Government:  
Stanley J. Okula (the ubiquitous one himself) here.
Nanette Davis
Niketh Velamoor.
 Prior Federal Tax Crimes blogs on the earlier trial convictions and vacation of the convictions for retrial are here.
  • Daugerdas and Others, But Not All, Get New Trial (Federal Tax Crimes Blog 6/4/12; revised 6/22/12), here.
  • Jury speaks in the Daugerdas Case -- Guilty! (Federal Tax Crimes Blog 5/24/11), here.

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