A former lawyer who was convicted in what U.S. prosecutors called the biggest criminal tax fraud in history was given 15 years behind bars for helping wealthy clients dodge taxes for years.
Paul Daugerdas, who worked at the Dallas-based law firm Jenkens & Gilchrist, which closed over the scandal, was sentenced today by U.S. District Judge William Pauley in Manhattan. A jury last year found Daugerdas, 63, guilty on seven counts and acquitted him on nine.
“Mr. Daugerdas was a tax-shelter racketeer who tapped into the incredible greed of some of the super wealthy,” Pauley said. “Just about everyone he came in contact with, he managed to corrupt.”
The tax shelters at the center of the case were sold from 1994 to 2004 to almost 1,000 people, creating $7 billion in fraudulent tax deductions and more than $1 billion in phony losses for customers, the U.S. said. Pauley described the clients as “real estate tycoons, tire magnates and software developers” who refused to contribute to the country that “made their achievements possible.” He didn’t identify them.
Pauley declined to give Daugerdas the full 20-year term sought by the government, saying the U.S. didn’t take into account the ex-lawyer’s age and the nine counts the jury had rejected.
Daugerdas was found guilty of counts including tax evasion and conspiracy in what Pauley called a “broad tax shelter conspiracy.”
The prosecution revealed “the lengths some wealthy citizens are willing to go” to avoid taxes, Pauley said. The case also showed that each time Daugerdas switched jobs and earned more, “it was never enough,” the judge said.
Daugerdas was ordered to forfeit $164.7 million and help pay restitution, with other conspirators, of $371 million.
Before the sentence was handed down, Henry Mazurek, Daugerdas’s lawyer, argued for a lighter term, saying the prosecutors’ requested sentence ignored the counts they failed to prove and “impugns the integrity of the jury trial system.”