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indictment

Former Jenkens & Gilchrist Tax Attorneys Indicted

June 10, 2009 · 6 comments

I know, I know. This doesn’t even feel like news. We’ve seen it coming for awhile now, ever since this little gem appeared on the Jenkens & Gilchrist web site in 2007:

jenkens_web.jpg

At the time of the closing, Jenkens agreed to pay a civil penalty of $76 million and cooperate with the IRS and the feds in exchange for the firm not being prosecuted. The firm. We all knew what that meant: individual members of the firm were going down. We just weren’t sure who, though we had a pretty good idea.

Now, we have the official word. Seven tax professionals were charged yesterday in a massive tax evasion scheme. The Jenkens attorneys who were indicted are Paul Daugerdas, Erwin Mayer and Donna Guerin. Also indicted were Denis Field and Robert Greisman, originally from BDO Seidman and Raymond Craig Brubaker and David Parse, formerly of “Bank A.” Though no one is naming “Bank A” in the indictment, where it is identified only as a “foreign bank with U.S. headquarters in New York”, most believe the bank to be Deutsche Bank.

The indictment charges all defendants with conspiracy to defraud the IRS and to evade taxes. Additionally, each of the defendants but Parse is charged with multiple counts of tax evasion in connection with tax shelters. Daugerdas and Mayer are also accused of using these tax shelters to illegal reduce their personal income taxes.

Why these tax professionals? Why now? Lev L. Dassin, the acting U.S. Attorney for the Southern District of New York, has written:

We are dedicated to holding accountable tax and financial professionals whose deceit and fraud cost this country millions in tax revenues. The allegations contained in the indictment reflect a brazen disregard for the law.

In other words, the feds want to use these guys as an example. And considering the amount of money thought to be at stake, they’re pretty high profile examples.

My guess is that the timing of the indictment stems from mistakes made in the KPMG case. I am sure that the feds are determined not to let that happen again.

If you’re curious (admit it, you are), you can read the entire indictment here. It downloads as a pdf – and it’s 78 pages long. You’ve been warned.

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Million Dollar Baby

October 19, 2007 · 2 comments

Pennsylvania State Senator Vincent Fumo has lately found himself in a whole heap of trouble. He is facing a whopping 139 indictments including 2 counts each of filing false tax returns and aiding and assisting in the filing of false tax returns.

To pay for some of his massive legal bills in conjunction with the charges, Fumo is selling his Philadelphia manse – for $7 million. While that kind of dough wouldn’t cause anyone to blink in New York or LA, that’s a pretty nice abode here in Philly. But what’s more interesting is that the Philadelphia Inquirer is reporting that many of the improvements to the house were made at taxpayer’s expense. That’s ironic, huh? Using money from taxpayers to fight charges of tax fraud?

The evidence that the Inquirer offers includes an email to a Fumo aide that reads:

We are still having trouble with the front door intercom. Please get this fixed ASAP.

Apparently, the aide who was paid out of government money spent most of his 18 months in “nearly a full-time capacity” as project manager for the renovations to Fumo’s home (note to self: next time planning home renovations, consider full-time project manager – that extra powder room took far too long to coordinate on your own). Did the aide do a good job? He must have. In just 13 years, the value of the home went from $175,000 to $7 million. Even in a health real estate market, that’s quite a climb.

Another aide allegedly cleaned Fumo’s home on a regular basis on a taxpayer’s dime.

Of course, Fumo denies the indictments, blah, blah, blah and claims that the charges are political.

The bit that I love the most? On this web site listing, which I believe is the home in question (how many $7 million homes are for sale on Green Street?), the description points out that “no expense was spared” – they left out the “at taxpayer’s expense” part.

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