Attorneys, Others Found Guilty in Tax Shelter Case

Former Jenkens & Gilchrist partners Paul Daugerdas and Donna Guerin were found guilty by a federal jury on multiple counts for their role in a massive, illegal tax shelter scheme.

In the second week of deliberations, the jury in Southern District Judge William Pauley's courtroom delivered guilty verdicts against Mr. Daugerdas and Ms. Guerin, along with former BDO Seidman CEO Denis Field and banker David Parse, formerly of Deutsche Bank Alex.Brown. The jury acquitted Raymond Craig Brubaker, a former Deutsche Bank Alex.Brown banker, on all nine counts against him.

The verdict was a huge win for the prosecution team of Southern District Assistant U.S. Attorneys Stanley Okula, Jason P. Hernandez, Katherine Failla, Rachel Kovner and Nanette Davis, who presented evidence of a conspiracy to devise, market and sell tax shelters with no economic substance and provide wealthy clients with paper losses that saved them hundreds of millions of dollars in taxes.

From the opening argument in the 10-week long trial, the prosecution explained to the jury that the opinion letters were the key to the successful marketing of shelters to clients who needed legal cover if and when the Internal Revenue Service came calling ( NYLJ, March 4 ).

Mr. Hernandez quoted Mr. Field during opening arguments as saying to colleagues they would be "swimming in a river of green" if they were aggressive in selling the shelters.

In Mr. Daugerdas' defense, Chris C. Gair of Jenner & Block in Chicago told the jury the opinion letters were cleared by Jenkens & Gilchrist's top tax lawyer, Michael Cook of Texas. Jenkens & Gilchrist is now defunct.

Mr. Gair said it was the job of Mr. Daugerdas to find loopholes in the tax code, which is subject to a variety of interpretations.

For Ms. Guerin, Mark Rotert of Stetler, Duffy & Rotert in Chicago said, "In the law, everything's debatable," because of conflicting opinions.

For Mr. Field, Sharon L. McCarthy of Kostelanetz & Fink argued that he was merely the "head showman and marketer" of the shelters but that two members of the firm who handled day-to-day operations, and went on to testify for the government under cooperation agreements, kept Mr. Field in the dark on crucial matters.

The jury, which began deliberations on May 12, convicted Mr. Daugerdas, Ms. Guerin and Mr. Field of conspiracy, with the goal of defrauding the United States and the IRS, committing tax evasion, mail and wire fraud. Mr. Parse was acquitted on that charge.

Mr. Daugerdas was convicted on 18 counts of tax evasion for work he did for clients, Ms. Guerin on nine counts and Mr. Field on four counts. Mr. Parse was acquitted on three counts of tax evasion. All four were found guilty of mail fraud and a corrupt endeavor to obstruct and impede the Internal Revenue Laws. Mr. Daugerdas was also convicted of three counts of personal tax evasion.

Mr. Parse is represented by Susan Brune, Theresa Marie Trzaskoma and Laurie Edelstein of Brune & Richard.

Mr. Brubaker is represented by Barry Berke and Paul Schoeman of Kramer Levin Naftalis & Frankel.

Sentencing is scheduled for Oct. 14.