Lawyer guilty, accounting firm CEO cleared in tax shelter case

NEW YORK Fri Nov 1, 2013 6:27am IST

NEW YORK (Reuters) - A former partner at the defunct law firm Jenkens & Gilchrist was found guilty Thursday of running a tax shelter scheme, while the former chief executive of accounting firm BDO Seidman was cleared on all charges in the same case.

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.

It was a stunning change of circumstances for Field, 55, who at an earlier trial was convicted along with Daugerdas, 63.

But U.S. District Judge William Pauley ordered a new trial in June 2012 after determining a juror had lied during jury selection.

The case spills out of what prosecutors have called a multibillion dollar tax fraud scheme that netted its architects $130 million in profits.

The probe helped bring down Jenkens & Gilchrist, a 600-attorney law firm based in Dallas whose Chicago office Daugerdas oversaw. The firm dissolved in 2007 after agreeing to pay a $76 million penalty to the Internal Revenue Service.

BDO USA, as the accounting firm is now known, agreed in June 2012 to pay $50 million to resolve government claims it sold tax shelters that generated $6.5 billion in phony tax losses for wealthy clients.

In the Daugerdas and Field case, prosecutors said from 1994 through 2004 that the men designed and marketed fraudulent tax shelters that enabled them to make millions of dollars in fees, commissions and bonuses.

The men, first charged in 2009, were among five defendants whose case first went to a jury in 2011.

At that earlier trial, jurors convicted Daugerdas; Field; Donna Guerin, another former Jenkens lawyer; and David Parse, a former Deutsche Bank AG broker. It acquitted a fifth defendant, former Deutsche Bank banker Craig Brubaker.

Guerin, who along with Daugerdas and Field won a right to a retrial last year, subsequently pleaded guilty in September 2012 and was sentenced in March to eight years in prison.

Parse, who did not receive a retrial, was sentenced to 3-1/2 years in prison in March.

Daugerdas is scheduled to be sentenced March 21. He faces up to 58 years in prison, according to the Manhattan U.S. attorney's office.

Lawyers for Daugerdas and Field did not immediately respond to requests for comment. A spokeswoman for Manhattan U.S. Attorney Preet Bharara had no immediate comment.

The case is USA v Paul Daugerdas et al, U.S. District Court, Southern District of New York, No. 09-cr-581.

(Reporting by Nate Raymond; Editing by Bob Burgdorfer and Edwina Gibbs)

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