Lawfuel.com – Lead story today – Jenkens & Gilchrist, a Dallas-based firm that once had 600 lawyers, is shutting down after reaching an accord with authorities to avoid prosecution for selling tax shelters that generated more than $1 billion in phony losses.
The firm admitted it developed and marketed fraudulent tax shelters and faces a $76 million fine, the Internal Revenue Service said. The non-prosecution agreement doesn’t apply to former Jenkens lawyers, prosecutors said. Yusill Scribner, a spokeswoman for U.S. Attorney Michael Garcia in New York, declined to say whether charges will be brought against them.
“These fraudulent cookie-cutter shelters purported to generate well over a billion dollars in tax losses and eliminate hundreds of millions of dollars in taxes owed by wealthy clients,” Garcia said in a statement. “They sounded too good to be true, and they were.”
The agreement is the latest outgrowth of a U.S. probe of illegal tax shelters. Separately, federal prosecutors in Manhattan have charged 16 former executives of KPMG LLP with cheating the U.S. Treasury out of at least $2 billion by selling illegal shelters. All have pleaded innocent. Five others in the case have pleaded guilty.
Jenkens & Gilchrist is closing its flagship Dallas office at month’s end and will no longer practice law. As many as 1,400 investors were advised by the firm and will owe interest and penalties for underpaying taxes, the IRS said in a statement.