Daugerdas has been ordered to forfeit $164.7 million in proceed, including a lakefront home on Lake Geneva, Wis., and more than $20 million in securities and financial accounts. He must also pay $371 million in restitution to the IRS. BDO Seidman agreed to pay $50 million in June 2012 to settle its issues. Daugerdas received a new trial after his original convictions were overturned.
The IRS and the Justice Department said Daugerdas and co-conspirators designed, marketed and implemented fraudulent tax shelters used by wealthy individuals to evade more than $1.6 billion in federal taxes. Without the shelters, Daugerdas would have owed $32 million by himself. Daugerdas, a resident of Wilmette, Ill., was convicted of conspiring to defraud the IRS, to evade taxes, and to commit mail and wire fraud, and of corruptly endeavoring to obstruct and impede the internal revenue laws. He was also convicted of four counts of tax evasion relating to the use of various tax shelters for specified clients, and of mail fraud.
The former head of the Chicago, Ill., law office of Jenkens & Gilchrist, he was found to have participated in the scheme from 1994 through 2004 in designing, marketing, implementing and defending fraudulent tax shelters. Daugerdas and the others plotted to prevent the IRS from understanding how the shelters worked--as cookie-cutter products intended exclusively to eliminate or reduce large tax liabilities with clients not seeking profit-making investments.
The co-conspirators helped create transaction documents that masked clients' motivations for utilizing the shelters. They also backdated some shelter transactions, in particular some in which transactions had been incorrectly implemented and failed to produce the amount or type of losses sought by clients. But instead of reporting those results, Daugerdas and others were involved in "correcting" transactions after the close of the pertinent years and then backdating documents to support their reports.
Among others convicted was David Parse, a former broker at Deutsche Bank, who received 46 months in prison in March 2013 after being convicted in a May 2011 trial. Also going to prison was Donna Guerin, a former lawyer at J&G's Chicago tax practice who drew an eight-year sentence in March 2013 after pleading guilty to various tax fraud charges in September 2012.
Others previously convicted were former J&G partner Erwin Mayer; former BDO Seidman vice chairman and board member Charles W. Bee Jr.; the firm's principal and member of its TSG and Tax Opinion Committee Michael Kerekes; and its former vice chairman and TSG member Adrian Dicker; and BDO partners Robert Greisman and Mark Bloom.Last modified on Tuesday, 01 July 2014