United States Attorney
Southern District of New York

Massive, Ten-Year Criminal Scheme Generated Over Seven Billion
Dollars Of Fraudulent Tax Losses

Defendants Netted $130 Million In Illicit Profits
PREET BHARARA, the United States Attorney for the
Southern District of New York, JOHN A. DiCICCO, the Principal
Deputy Assistant Attorney General for the Justice Department’s
Tax Division, and VICTOR S.O. SONG, Chief of the Internal Revenue
Service (“IRS”) Criminal Investigation, announced that PAUL M.
convicted today in Manhattan federal court for their roles in a
tax shelter scheme in which they designed, marketed, and
implemented fraudulent tax shelters used by wealthy individuals
to avoid paying taxes to the IRS. Together, DAUGERDAS, GUERIN
and FIELD made $130 million in profits from the ten-year scheme.
RAYMOND CRAIG BRUBAKER, 55, of Plano, Texas, a banker at Deutsche
Bank who was also charged along with the defendants, was
acquitted by the jury on all counts. U.S. District Judge WILLIAM
H. PAULEY III presided over the ten-week trial.

Manhattan U.S. Attorney PREET BHARARA stated: “The
multi-billion dollar tax fraud scheme perpetrated by this corrupt
group of attorneys, accountants, and bankers was stunning in
scope, and today’s guilty verdicts are a just result. These
privileged professionals wove an intricate web of deceit that
spanned nearly a decade, enabling them to enrich themselves and
their well-heeled clients to the tune of hundreds of millions of
dollars. Surely there are many Americans who dread April 15th,
but they put their checks in the mail nonetheless. These
defendants thought they were above the law and found out the hard
way that they were not. I commend the career prosecutors from my
Office and the Tax Division, along with the agents of the IRS,
who have all devoted countless hours to bring this case to a
successful conclusion.”

Principal Deputy Assistant Attorney General of the
Justice Department’s Tax Division JOHN A. DiCICCO stated:
“Today’s verdict sends a loud and clear message that dishonest
tax professionals will be held accountable for their crimes. The
Justice Department will continue to pursue the lawyers,
accountants, and others who enrich themselves at the public’s
expense by selling abusive tax shelters.”

Chief of IRS-Criminal Investigation VICTOR S.O. SONG
stated: “Promoting and marketing tax shelter transactions
intended to conceal the true facts from the IRS isn’t tax
planning; it’s criminal activity. People trust their attorneys
and Certified Public Accountants to hold the highest standards
when dealing in financial transactions. Today’s conviction of the
defendants reinforces our commitment to every American taxpayer
to identify and to prosecute those who devise illegal tax
shelters. It’s a matter of fostering confidence in the tax system
and compliance with the law.”

According to the trial evidence and other documents
filed in the case:
From 1994 through 2004, DAUGERDAS, a lawyer and the
former head of the Chicago Office of the Jenkens & Gilchrist law
firm (“J&G”) and its tax practice; GUERIN, a tax lawyer and
shareholder at J&G’s Chicago Office; FIELD, the former Chief
Executive Officer and Chairman of the Board of the accounting
firm BDO Seidman, former head of its national tax practice, and
one of three heads of BDO’s “Tax Solutions Group” (“TSG”), and
PARSE, a former Deutsche Bank broker, participated in a scheme to
defraud the IRS by designing, marketing, implementing, and
defending fraudulent tax shelters. All of the defendants are
certified public accountants.
As part of their scheme, the defendants and others
undertook to prevent the IRS from: (i) detecting their clients’
use of these shelters; (ii) understanding how the transactions
operated to produce the tax results reported by the clients;
(iii) learning that the shelters were marketed as cookie-cutter
products designed to eliminate or reduce large tax liabilities;
(iv) learning that the clients were not seeking profit-making
investment opportunities, but were instead seeking huge tax
benefits; and (v) learning that, from the outset, all the clients
intended to complete a pre-planned series of steps that had been
designed by the defendants to lead to the specific tax benefits
sought by the clients. The defendants created, and assisted in
creating, transactional documents and other materials that
falsely and fraudulently described their clients’ motivations for
entering into the tax shelters and for taking various steps in
order to yield the tax benefits.
As a result of the scheme, the defendants made millions
of dollars in fees, commissions and bonuses. For example,
DAUGERDAS made $95 million and GUERIN made $17 million from the
sale of the shelters. FIELD received $18 million in distributions
and bonuses. Defendants DAUGERDAS, FIELD, and PARSE also
utilized the tax shelters for themselves in order to evade
personal tax liabilities on the substantial income they were
receiving from these fraudulent tax shelters. For example,
DAUGERDAS used the shelters to reduce the income taxes he owed on
the $95 million he made in fees on the illegal shelters to less
than $8,000; without the shelters, he would have owed over $32
million in taxes.
* * *
DAUGERDAS, 60, of Wilmette, Illinois; GUERIN, 50, of
Elmhurst, Illinois; and FIELD, 53, of Naples, Florida were each
convicted of conspiring to defraud the IRS and to evade taxes,
and of corruptly endeavoring to obstruct and impede the internal
revenue laws. The defendants were also convicted on multiple
counts of tax evasion relating to the use of various tax shelters
for specified clients, and of mail fraud. DAUGERDAS also was
convicted of tax evasion based on his use of fraudulent tax
shelters to eliminate or reduce his personal income tax
liabilities between 1999 and 2001. PARSE 49, of Elmhurst,
Illinois, was found guilty of mail fraud and obstructing internal
revenue laws.
On the conspiracy charge, each defendant faces a
maximum penalty of 5 years in prison; 3 years’ supervised
release; a fine of the greatest of $250,000 or twice the gross
gain to the defendant or twice the gross loss to the IRS; and
restitution. On the mail fraud charge, each defendant faces a
maximum penalty of 20 years in prison. Each count of tax evasion
carries a maximum penalty of 5 years in prison; 3 years’
supervised release; a fine of the greatest of $250,000 or twice
the gross gain to the defendant or twice the gross loss to the
IRS; and costs of prosecution. Each defendant also faces a
maximum penalty of 3 years in prison; 1 year supervised release;
and a fine of the greatest of $250,000 or twice the gross gain to
the defendant or twice the gross loss to the IRS on the charge of
corruptly endeavoring to obstruct and impede internal revenue
The defendants are scheduled to be sentenced by Judge
PAULEY on October 14, 2011, at 2:00 p.m.
Several other defendants involved in the case have
previously pled guilty:
ERWIN MAYER, 47, of Winnetka, Illinois, a lawyer and
former shareholder at J&G’s Chicago Office in its tax practice.
ROBERT GREISMAN, 60, of Deerfield, Illionis, a tax
partner in BDO’s Chicago Office and a member of BDO’s tax
solutions group.
CHARLES W. BEE, JR.,65, of Fredericksburg, Virginia, a
former BDO Seidman Vice Chairman and board member.
MICHAEL KEREKES, 48, of Santa Monica, California, a
principal of BDO Seidman and a former member of BDO’s TSG and Tax
Opinion Committee.
ADRIAN DICKER, 56, of Princeton Junction, New Jersey, a
former Vice Chairman of BDO Seidman and TSG member.
In December 2010, as part of a non-prosecution
agreement with the U.S. Attorney’s Office, Deutsche Bank AG
agreed to pay $553,633,153 to the United States, and also
admitted criminal wrongdoing, in connection with its
participation in financial transactions which furthered the
fraudulent tax shelters engineered by the defendants.
Mr. BHARARA thanked the IRS and the Department of
Justice Tax Division for their efforts in this case.
This prosecution is being handled by the Office’s
Complex Frauds Unit. Assistant U.S. Attorneys STANLEY OKULA and
JASON HERNANDEZ, and Department of Justice Tax Division Assistant
Section Chief NANETTE L. DAVIS are in charge of the prosecution.
11-146 ###

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