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After an hour’s deliberation, an Oakland, California jury acquitted former Bechtel global tax manager Mark Muntean on charges that he caused the company to file a false tax return. Federal prosecutors argued that Muntean, an attorney, knew a research and development credit claimed by Bechtel was improper, but filed it anyway.
Muntean’s lawyer, John Youngquist, countered that his client trusted subordinates to give him complete information, but they did not. Bechtel corrected the error after Idaho tax authorities raised questions.
News of Muntean’s indictment was widely covered in the professional press, leading to fears that the government was trying to criminalize tax advice that turned out to be simple error. Sideman & Bancroft partner Jay Weill, who was the longtime tax chief in the Northern District US Attorney’s Office, said he had never seen a similar prosecution.
Muntean claimed a $3.3 million R&D tax credit for a project in Idaho. But since that project was financed by the government, the company wasn’t allowed to benefit from the credit. As soon as the outside counsel’s investigation found that improper tax credits had been taken, Bechtel voluntarily disclosed the improper credits to the IRS and filed an amended return.
Bechtel brought in Shearman & Sterling partner B. John Williams Jr., former chief counsel of the IRS under President Bush, to do an internal investigation. According to Youngquist, Williams fingered Muntean and turned the contents of his probe over to the government.
Without the Shearman probe, the government never would have focused on Muntean, Youngquist contends, adding that his client may now have a civil claim against the company.
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After leaving Bechtel, Muntean landed at Jeffer, Mangels, Butler & Marmaro. But he had to resign that job once the indictment became public.
San Francisco-based Bechtel is the largest engineering company in the United States, ranking as the nation’s 9th-largest privately owned company.
