(New throughout, updates with further details from sentencing))
By Nate Raymond
NEW YORK, June 25 A former partner at the
defunct law firm Jenkens & Gilchrist was sentenced to 15 years
in prison on Wednesday following his conviction in what
prosecutors call the largest criminal tax fraud in U.S. history.
Paul Daugerdas, who once ran the law firm's Chicago office,
had been found guilty by a New York federal jury on charges
including conspiracy, tax evasion and mail fraud.
Prosecutors said Daugerdas reaped $95 million from the
scheme, which involved fraudulent tax deductions or benefits
exceeding $7 billion and $1.63 billion in lost U.S. tax revenue.
U.S. District Judge William Pauley, who imposed the
sentence, said Daugerdas had "tapped into the incredible greed
of the wealthy," and corrupted numerous professionals to advance
a scheme to promote fraudulent tax shelters.
"Daugerdas is in a class by himself," Pauley said. "He was
at the apex of tax shelter racketeers."
Pauley also ordered Daugerdas to forfeit $164.7 million and
pay $371 million in restitution jointly with other
Prosecutors said Daugerdas, 63, devised and supervised the
promotion of fraudulent tax shelters over almost two decades.
They said much of the fraud took place while he worked at
Jenkens & Gilchrist, which Daugerdas joined in 1998.
Other attorneys at the 600-lawyer firm as well as
co-conspirators at Deutsche Bank AG and accounting
firm BDO Seidman helped carry out the fraud, prosecutors said.
Jenkens & Gilchrist, based in Dallas, dissolved in 2007
after agreeing to pay a $76 million penalty to the Internal
Revenue Service in connection with the investigation.
Daugerdas was indicted in 2009. A jury found him guilty in
2011, along with former Jenkens partner Donna Guerin; Denis
Field, BDO's former chief executive; and David Parse, a Deutsche
Bank broker. The jury acquitted another Deutsche broker, Raymond
Parse was sentenced in 2013 to 3-1/2 years in prison.
Daugerdas, Guerin and Field won a retrial after the judge
determined a juror had lied during jury selection, a fact Pauley
recounted Wednesday in questioning why prosecutors had not
brought charges against her.
Guerin pleaded guilty to conspiracy and tax evasion charges
ahead of the second trial and was sentenced last year to eight
years in prison.
At the retrial, Daugerdas was found guilty on seven of the
16 counts he faced, while Field was acquitted.
Prosecutors had sought at least 20 years in prison for
Daugerdas, a term his lawyer argued ignored his acquittal on
charges that encompassed much of the case.
"The verdict should make a difference," Henry Mazurek,
Daugerdas' lawyer, said.
One other Jenkens & Gilchrist partner and five BDO partners
pleaded guilty to related charges.
BDO USA, as the accounting firm is now known, agreed in 2012
to pay $50 million to resolve related claims. Deutsche Bank
separately agreed in 2010 to pay $553.6 million as part of a
The case is U.S. v. Daugerdas, U.S. District Court, Southern
District of New York, No. 09-cr-00581.
(Editing by Marguerita Choy, Leslie Adler and David Gregorio)