Paul Daugerdas Sentenced in Largest Tax Fraud Case in History

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Paul Daugerdas has been sentenced to 15 years in prison for what prosecutors have called the largest criminal tax fraud case in history, according to Businessweek. Daugerdas is a lawyer who helped his clients avoid paying taxes for years. He worked at Jenkens & Gilchrist, in Dallas, which shut its doors due to the scandal.

Daugerdas was sentenced by U.S. District Judge William Pauley in Manhattan. A jury found Daugerdas guilty last year on seven counts. He was acquitted on nine counts.

  

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Pauley, according to Businessweek, said, “Mr. Daugerdas was a tax-shelter racketeer who tapped into the incredible greed of some of the super wealthy. Just about everyone he came in contact with, he managed to corrupt.”

The case focused on tax shelters that were sold to clients from 1994 to 2004 that created some $7 billion in fraudulent tax deductions and $1 billion in phony losses for the 1,000 clients. The clients were not identified by Pauley, but he did describe them as “real estate tycoons, tire magnates and software developers” who refused to contribute to the country that “made their achievements possible.”

Pauley ordered Daugerdas to pay restitution, with co-conspirators, of $371 million and surrender $164.6 million.

In the same case, Denis Field was acquitted last year. He is the former chief executive officer of BDO Seidman. Field and Daugerdas had been charged with operating the 10-year scam that cost the Treasury Department $92 million.

To generate fraudulent losses for their clients, the defendants created shelters called “Swaps,” “Short Options Strategy,” “Short Sales” and “Homer.”

The two defendants were part of a group of seven who were indicted back in June of 2009. Two people charged decided to plead guilty and cooperate in the investigation. Those two were former BDO Seidman partner Robert Greisman and former attorney from Jenkens & Gilchrist Erwin Mayer.

A former partner at the firm, Donna Guerin, was sentenced in March of 2013 by Judge Pauley. She was given eight years in prison and ordered to pay restitution of $190 million.