LA New York federal jury has found a Wilmette man guilty of all charges in a tax fraud case whose central scheme, prosecutors said, netted Paul M. Daugerdas, his codefendants and their wealthy clients $130 million in illicit profits.
Daugerdas, 60, is scheduled to be sentenced Oct. 14 in Manhattan by U.S. District Judge William H. Pauley III, who presided over the 10-week trial.
Daugerdas’ attorney said after the May 24 verdict that his client will appeal.
The jury also found guilty Elmhurst tax attorney Donna Guerin, 50; tax attorney Denis Field, 53, of Naples Fla.; and former investment broker David Parse, 49, also of Elmhurst.
Daugerdas, an attorney, formerly headed the now defunct Jenkens & Gilchrist law firm, heading its Chicago office and its tax practice. Prosecutors described him as the mastermind of a legal and accounting team that, between 1994 and 2004, designed, marketed and used fraudulent tax shelters to help their clients and themselves avoid paying taxes by generating millions of dollars in apparent losses.
He was convicted of conspiring to defraud the Internal Revenue Service and to evade taxes, and of trying to obstruct tax laws. The jury also found him guilty of mail fraud and multiple counts of tax evasion. Additionally, the Wilmette resident was convicted of tax evasion based on his own use of phony tax shelters to eliminate or reduce his personal income tax liabilities between 1999 and 2001.
Daugerdas faces up to five years in prison on the conspiracy charge, as well as a fine of $250,000 or twice his gross gain, and restitution. Each tax evasion count could net him the same set of penalties, plus prosecution costs. He could also face up to three years in prison and more fines on the obstruction charge.
Guerin, another Jenkens & Gilchrist attorney, partner and shareholder in the firm, was found guilty of the same charges as Daugerdas, as was Field, who is the former chief executive officer and chairman at the BDO Seidman accounting firm and former head of its national tax practice. Parse, a former investment broker for Deutsche Bank, was found guilty of mail fraud and IRS obstruction.
The jury acquitted Raymond Craig Brubaker, 55, of Plano, Texas, a banker at Deutsche Bank, on all counts.
U.S. Attorney Preet Bharara of the Southern District of New York, said May 24 in a news release that the tax fraud scheme was “stunning in scope” and wove a web of deceit spanning nearly a decade.
“Surely there are many Americans who dread April 15th, but they put their checks in the mail nonetheless,” Bharara said. “These defendants thought they were above the law and found out the hard way that they were not.”
During the trial, prosecutors charged that Daugerdas made $95 million through the sale of the shelters and avoided paying taxes on his own income from those shelters by cutting it to less than $8,000.
Two other local men named in the original 2009 indictment, Winnetka resident Erwin Mayer and Deerfield resident Robert Greisman, have already pled guilty to charges.
Greisman, a former tax partner at BDO Seidman, pled guilty in July 2009. Mayer, a tax partner and shareholder at Jenkens & Gilchrist, pled guilty last October, and has already agreed to relinquish more than $10 million in assets, including his Winnetka home and one in Wisconsin. Their sentencing dates have not yet been set.
