Former BDO Vice Chair Pleads Guilty to Tax Fraud

 

The ex-chief executive of accounting firm BDO Seidman and six others were indicted Tuesday, June 9 on federal charges they peddled questionable tax shelters that generated more than $7 billion in phony losses for hundreds of wealthy clients who used the losses to offset real income and cut their tax bills.

 

According to the indictment filed on June 9 in Manhattan federal court, the defendants and their co-conspirators designed, marketed, and implemented fraudulent tax shelters used by wealthy individuals with multimillion-dollar taxable income in order to eliminate or reduce the taxes they would have to pay the IRS.

 

The Indictment charges the seven individuals in 27 separate counts, including conspiracy to defraud the IRS, tax evasion, and impeding and impairing the lawful functioning of the IRS.

 

Former BDO Seidman Vice Chairman and board member Charles W. Bee Jr., pleaded guilty on June 3, 2009, to related charges of conspiracy to defraud the IRS, tax evasion, and perjury. Michael Kerekes, another principal of BDO Seidman and also a former member of BDO’s TSG and Tax Opinion Committee, pleaded guilty on Feb. 13, 2009, to related conspiracy and tax evasion charges. Adrian Dicker, a former Vice Chairman of BDO Seidman and TSG member, also pleaded guilty on March 17, 2009, to related conspiracy and tax evasion charges.

 

“We are dedicated to holding accountable tax and financial professionals whose deceit and fraud cost this country millions in tax revenues,” said Lev L. Dassin, the Acting U.S. Attorney for the Southern District of New York. “The allegations contained in the Indictment reflect a brazen disregard for the law.”

 

The seven individuals charged in the Indictment are:

 

Paul M. Daugerdas, 58, of Wilmette, Ill., a lawyer, was the former head of J&G’s Chicago office and its tax practice. Daugerdas is a certified public accountant who previously served as a tax partner at Arthur Andersen LLP and head of the tax department at the Chicago law firm Altheimer & Gray (A&G).

 

Erwin Mayer, 45, of Winnetka, Ill., a lawyer, was a shareholder at J&G’s Chicago office in its tax practice. Mayer is an accountant who previously served as a tax partner in A&G’s Chicago office.

 

Donna Guerin, 48, of Elmhurst, Ill., a lawyer, was a shareholder at J&G’s Chicago office in its tax practice. Guerin is a certified public accountant who previously served as a tax partner in A&G’s Chicago office.

 

Denis Field, 51, of Naples, Fla., is the former Chief Executive Officer and Chairman of the Board of BDO Seidman, former head of its national tax practice, and one of three heads of BDO’s “Tax Solutions Group,” which handled all aspects of BDO’s tax shelter practice. Field is a certified public accountant and an attorney, with an LLM in taxation.

 

Robert Greisman, 48, of Deerfield, Ill. was a tax partner in BDO’s Chicago office and a member of BDO’s Tax Solutions Group. GReisman is a certified public accountant and an attorney.

 

Raymond Craig Brubaker, 53, of Plano, Texas, is a former investment representative at Bank A’s Dallas office. Brubaker, who is a certified public accountant and an attorney, previously served as a tax partner in Arthur Andersen’s Dallas office.

 

David Parse, 47, of Elmhurst, Ill., is a former investment representative at Bank A’s Chicago office. Parse is a certified public accountant.

 

Among the alleged fraudulent tax shelter designed, marketed, and implemented by the defendants and their co-conspirators were “Short Sales,” “Short Options Strategy” (SOS), “Swaps,” and “HOMER.” The Short Sale tax shelter was marketed and sold from at least 1994 through at least 1999 to at least 290 wealthy individuals and generated at least $2.6 billion in false and fraudulent tax losses. The SOS tax shelter was marketed and sold from at least 1998 through at least 2000 to at least 550 wealthy individuals, and generated at least $3.9 billion in false and fraudulent tax losses. The Swaps tax shelter was marketed and sold in 2001 and 2002 to at least 55 wealthy individuals, and generated more than $420 million in false and fraudulent tax losses. The HOMER tax shelter was marketed and sold in 2001 to at least 36 wealthy individuals, and generated more than $400 million in false and fraudulent tax losses.