April 20, 2024

4 Convicted of Mail Fraud in Tax Shelter Case

The verdict ends a 10-week trial that featured a parade of wealthy Americans who told how they had avoided taxes through the complex investment instruments the defendants created. The government said the defendants had made $130 million in illicit profits in a 10-year scheme.

Nanette Davis, an assistant United States attorney, said in her closing argument that those who had benefited from the tax shelters included some of the “most well-heeled, richest investors in the world.” They included the late sports entrepreneur Lamar Hunt, trust fund recipients, inventors, a grandson of the late industrialist Armand Hammer and people who built fortunes in real estate or family businesses.

Among those convicted was Paul M. Daugerdas, 60, of Wilmette, Ill., a lawyer who prosecutors said was the mastermind of the scheme. He was the former head of the Chicago office of the Jenkens Gilchrist law firm and its tax practice. The other lawyer convicted was Donna M. Guerin, 50, of Elmhurst, Ill., who worked at the same office as Mr. Daugerdas.

Also convicted were Denis M. Field, 53, of Naples, Fla., the former chief executive and chairman of the accounting firm BDO Seidman and the former head of its national tax practice; and David Parse, 49, of Elmhurst, Ill., a former Deutsche Bank broker. One accountant, Raymond Craig Brubaker, 55, of Plano, Tex., was acquitted.

Sentencing was set for Oct. 14. All four face sentences that could exceed 20 years in prison.

Preet Bharara, the United States attorney, said the tax fraud “was stunning in scope” and cheated the I.R.S. out of millions of dollars in revenue.

Prosecutors said Mr. Daugerdas made $95 million through the sale of the shelters and then reduced his income from the shelters to less than $8,000 so he could evade paying taxes.

Defense lawyers argued during the trial that their clients had not thought that what they were doing was wrong.

Ms. Davis said the fraud relied on a pattern of lies, including false information about what the tax shelters were and how they worked, lies in formal opinion letters, backdated transactions, false information in files prepared for the I.R.S., lies to the I.R.S. during audits and the coaching of clients to lie.

The trial featured testimony by 24 tax shelter clients and five former colleagues of the defendants, including four who had pleaded guilty in the case.

Ms. Davis said that Mr. Daugerdas would have had to pay more than $32 million in taxes on his $95 million in profits, but with the shelters managed to pay only a few thousand dollars in taxes.

Charles Sklarsky, the lawyer for Mr. Daugerdas, argued that his client was a lawyer “who pushed the law, who took aggressive positions that the I.R.S. didn’t like.”

Mark Rotert, the lawyer for Ms. Guerin, said the facts of the case “scream out that what she was doing was how a tax attorney makes a living.”

Article source: http://feeds.nytimes.com/click.phdo?i=f7df484e6fa96899a72ed5435251ecef

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