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David Parse

Other Federal Tax Evasion Cases
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In June 2009, a federal grand jury in New York indicted 42-year-old David Parse, a former investment representative in the Chicago office of Deutsche Bank, along with six others on charges of marketing illegal tax shelters.

Also indicted were 51-year-old Denis Field, the former Chief Executive Officer of BDO Seidman, a financial consulting firm, along with Paul Daugerdas, former head of the Chicago office of Jenkens & Gilchrist—a law firm based in Dallas that ultimately collapsed over the tax shelter scandal—and two other Jenkens & Gilchrist attorneys, Erwin Mayer and Donna Guerin. Robert Greisman, a former BDO tax partner, was also charged, as was Raymond Craig Brubaker, who, like Parse, was a former investment representative in Deutsche’s Chicago office.

The indictment charged that the group conspired to defraud the Internal Revenue Service from 1994 through 2004. The indictment alleged that they created financial documents to make it seem that tax shelters they devised were used to generate profits and to minimize the chances the IRS would discover that the shelters were actually designed to generate unwarranted tax losses and deductions.

The prosecution said the shelters generated more than $130 million in fees, commissions, and bonuses for the defendants while causing more than $7 billion in fraudulent tax deductions and more than $1 billion in false tax losses.

Greisman and Mayer pled guilty and agreed to testify for the prosecution. The remaining five defendants went to trial in the spring of 2011 in U.S. District Court in Manhattan. After a 12-week trial, Field, Daugerdas, Guerin and Parse were convicted. Brubaker was acquitted. Parse was convicted of mail fraud and tax obstruction, for executing transactions to implement the shelters and for relying upon the advice of Field and BDO. The jury acquitted Parse of conspiracy.

Before sentencing, defense lawyers filed a motion for a new trial claiming that a juror had repeatedly lied about her background during jury selection. Her lies included concealing that she was a suspended attorney and an alcoholic. In June 2012, U.S. District Judge William Pauley granted Field, Daugerdas and Guerin new trials.

However, Judge Pauley denied a new trial for Parse. The judge found that the Parse’s lawyers knew—or “with a modicum of diligence would have known—that (the juror’s) testimony (during jury selection) was false and misleading.” Judge Pauley concluded that Parse’s attorney knew about the juror’s deception and made a strategic decision not to do anything about it at trial. Parse was sentenced to 3½ years in prison, ordered to forfeit $1,000,000 and to pay $115 million in restitution.

Guerin pled guilty and was sentenced to eight years in prison and ordered to pay $190 million in restitution.

In the fall of 2013, Daugerdas and Field went on trial for a second time.

Daugerdas was facing 16 charges of conspiracy and tax fraud for his role in devising the tax shelters that were later marketed through BDO, Bank One and American Express Tax and Consulting. The prosecution claimed that the shelters were contrived to make it appear to the IRS that the owners were making slight profits, when in fact the owners were able to claim millions of dollars in tax deductions and reduce their tax liabilities.

The prosecution portrayed Daugerdas as the mastermind who designed the tax shelters, and claimed that he earned $95 million in fees on the shelters. Daugerdas himself repeatedly used the tax shelters and, according to the prosecution, fraudulently reduced his tax liability from $32 million to a mere $8,000.

Field had been one of three managers of the BDO tax shelter group. In January 1999, about a year after the firm began marketing the shelters, he was promoted to BDO’s CEO, overseeing the entire firm. Field faced seven counts, including tax fraud and conspiracy.

Along with the testimony of three cooperating witnesses, the prosecution’s primary evidence against Field was his involvement in editing a report written by the law firm Skadden, Arps, Slate, Meagher & Flom about BDO’s tax shelter practices. BDO had hired Skadden to review practices and procedures and provide best practices advice. Former IRS Commissioner Fred Goldberg was the primary Skadden attorney who worked on the BDO project.

According to the prosecution, Skadden went beyond providing best practices advice, and included in its report a section entitled “Possible IRS Reactions.” That section pointed out that the IRS was likely to look unfavorably upon some of BDO’s tax shelter practices.

Field, along with Scott Univer, BDO’s then-general counsel, suggested to Skadden Arps that the portion of the report relating to the possible IRS reactions to the tax shelter practices be deleted. Skadden deleted the segment. The prosecution argued that if that portion of the report had remained, BDO would have been forced to shut down the lucrative tax shelter business and that Field’s involvement in the deletion showed a criminal intent to defraud the IRS.

Before the retrial, Field’s lawyers obtained depositions and statements given by Univer and Goldberg, who were prosecution witnesses at the first trial. Univer had been questioned under oath in a separate civil action brought by BDO against another law firm. The depositions were given after the first trial, but the prosecution had failed to disclose their existence to the defense. The defense claimed that the depositions supported Field’s claim that he acted in good faith and had no intention to defraud the government.

Univer, an in-house attorney who provided legal advice to the BDO tax shelter group, testified in the deposition that he never intended to show the written report to anyone outside of the tax shelter group and that it was his practice not to provide the written work-product of outside counsel such as Skadden to BDO’s board of directors. Univer further testified that he had no problem with any of the edits and that Field, as CEO, had never asked him to do anything that was against the best interests of BDO.

In his deposition, Goldberg testified that he was comfortable with the edits and that the IRS section was beyond the scope of the work for which Skadden had been hired.

Field’s defense attorneys used the deposition testimony of Univer and Goldberg to counter the prosecution’s argument that Field conspired to defraud the government. They argued that the depositions showed that Field followed his lawyers’ advice and acted in good faith.

On October 31, 2013, after eight weeks of trial, the jury convicted Daugerdas of conspiracy, tax fraud and mail fraud. Field, who had been free on bond since he was indicted, was acquitted on all counts. Daugerdas was sentenced to 15 years in prison and ordered to pay $371 million in restitution and forfeit nearly $200 million in assets.

In April 2015, the U.S. Court of Appeals for the Second Circuit reversed Parse’s convictions for mail fraud and income tax obstruction and ordered a new trial. The appeals court ruled that while Parse’s lawyers may have been suspicious of the juror, their failure to ask additional questions during jury selection or to “otherwise pursue additional information sufficient to reveal that (the juror) had pervasively lied despite her oath, did not provide an appropriate basis for (Judge Pauley’s) finding that they did in fact know the truth.”

Parse’s lawyers were prepared to present at the retrial the evidence that the tax shelter advice provided by BDO was done in good faith and that Parse was also acting in good faith as an investment advisor at Deutsche.

On November 16, 2015, the prosecution agreed to defer prosecution of Parse for one year during which time he was required not to violate any laws or engage transactions similar to what was charged in the indictment. Parse was then released from prison.

On November 23, 2016, the prosecution said that Parse had completed the year successfully and dismissed the charges.

– Maurice Possley

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Posting Date: 12/7/2016
State:Fed-NY
County:(Southern)
Most Serious Crime:Tax Evasion/Fraud
Additional Convictions:Fraud
Reported Crime Date:2004
Convicted:2011
Exonerated:2016
Sentence:3 1/2 years
Race:Caucasian
Sex:Male
Age at the date of crime:42
Contributing Factors:Perjury or False Accusation
Did DNA evidence contribute to the exoneration?:No