(CN) – The government on Tuesday indicted seven individuals — including three former Jenkens & Gilchrist partners, the former CEO of BDO Seidman and two ex-bankers — on charges that they helped wealthy clients avoid paying millions in taxes by advertising and selling fraudulent tax shelters.
“Dishonest and fraudulent tax professionals, including accountants, attorneys, and bankers, should stand up and take note of today’s indictment,” said John A. DiCicco, acting assistant attorney of the Justice Department’s Tax Division.
According to the federal indictment, former BDO chief executive Denis Field, 51, formed a “tax solutions group” that advertised tax shelters created by tax attorneys at Jenkens & Gilchrist (J&G), a major Texas law firm that is now defunct. The group allegedly helped wealthy clients “eliminate or reduce taxes on significant income or gains.”
“BDO touted the tax shelters internally as ‘value-added products’ whereby fees far in excess of the normal BDO hourly billing rates would be charged,” the indictment states.
In late 1998, Field and former BDO partner Robert Greisman, 48, began selling J&G tax shelters in exchange for kickbacks, the government claims. The accounting firm eventually began charging its own fee on top of the fee it received from the law firm, the indictment states.
The indictment charges Field, Greisman and five other individuals in 27 separate counts, including conspiracy to defraud the IRS, tax evasion, and impeding and impairing the lawful functioning of the IRS.
The alleged conspirators include former J&G shareholders Paul M. Daugerdas, 58; Erwin Mayer, 45; and Donna Guerin, 48; former Dallas banker Raymond Craig Baker, 53; and former Chicago banker David Parse, 47.
The fraudulent tax shelters included “Short Sales,” “Short Options Strategy,” “Swaps” and “HOMER,” and allegedly generated a combined $7.32 billion in false tax losses, the government claims.
Former BDO executives Charles W. Bee, Michael Kerekes and Adrian Dicker pleaded guilty to related charges of conspiracy to defraud the IRS and tax evasion. Bee entered his plea earlier this month.
“Professionals who sell and promote fraudulent tax shelters that help wealthy clients illegally evade taxes face serious felony charges and substantial prison time,” DiCicco said.