Jenkins & Gilchrist attorney sentenced to 8 years for tax shelter work
In the late 90s and early 2000s, Jenkins & Gilchrist (J&G) made lots of money promoting bogus tax shelters, often using derivatives and partnerships, to generate phantom losses to offset real (economic) income or to defer recognition of income. The highly promoted but secretive deals had catchy names, like “SOS” (for “short options strategy”), and generated very high fees (based on a percentage of the tax loss generated by the shelters!) from the wealthy individual clients that considered themselves above the (tax) law. In return for the fees, the law firms promoting the shelters assisted the clients in all stages of the shelters, including setting up bank accounts and sham corporations and partnerships as needed, topping it off with a “more likely than not” “get out of jail free” tax opinion. Download Guerin Donna Sentencing PR.
As the press release notes, one such shelter, sold between 1994 and 1999 to almost 300 wealthy individuals, generated about $2.6 billion in fake tax losses. The SOS shelter, sold between 1998 and 2000 to more than 500 wealthy individuals, generated at least $3.9 billion in fake tax losses. And so on.
Donna Guerin, one of the partners at J&G (and earlier at Altheimer & Gray) during that period, was instrumental in the design and marketing of the shelters. She was originally convicted in May 2011 in a jury trial, but juror misconduct led to the scheduling of a new trial for March 2013. Guerin pled guilty instead of facing trial and was sentenced last Friday to eight years of jail time on conspiracy and tax evasion charges. She was also ordered to pay restitution of $190 million. Not only did she participate in the marketing and implementation of the tax shelters, but Guerin also “took part in the illegal back-dating of certain tax shelter transactions,” making more than $17 million between 1998 and 2002 from her illegal activities. Op. Cit.
Congratulations are due to Assistant US Attorneys Stanley Okula, Jr. and Jason P. Hernancez, as well as DOJ Tax Division Assistant Chief Nanette Davis, who handled the prosecution of these tax frauds. These promoted shelters reveal the lengths to which wealthy American–and, too often, also their advisers–will go to avoid their personal responsibilities and duties to We the People. Hopefully, attorneys will pay more attention to their duties to the integrity of the courts going forward. And this should be a reminder to all those who claim that “the 47%” don’t care about personal responsibility that there is a good deal of evidence about the 1% being negligent of their public responsibilities .
2013-03-04 13:07:13
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