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David Parse

Other Federal Tax Evasion Cases
In June 2009, a federal grand jury in New York indicted 47-year-old David Parse, a former investment representative in the Chicago office of Deutsche Bank Alex. Brown, Inc., 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 was a former investment representative in Deutsche Bank Alex. Brown’s Dallas office.

The indictment charged that from 1994 through 2004, the group participated in a scheme to defraud the Internal Revenue Service by designing, implementing and defending tax shelters to deceive the IRS.

The prosecution said the shelters generated more than $130 million in profits for Field, Daugerdas and Guerin 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 and Guerin were convicted on all counts. Parse was acquitted of conspiracy and three counts of tax evasion and was convicted of mail fraud and tax obstruction. Brubaker was acquitted of all charges.

Before sentencing, defense lawyers filed a motion for a new trial claiming the trial was unfair because a juror had repeatedly lied about her background during jury selection. Her lies included concealing that she was an attorney suspended from the practice of law because of alcohol dependency and professional misconduct, was on criminal probation at the time of the trial, had an outstanding warrant for her arrest, and that she and her husband both had extensive criminal backgrounds.

In June 2012, following a two-day hearing 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 attorneys made a strategic decision not to do anything about it. Parse was sentenced to 3½ years in prison, ordered to forfeit $1,000,000 and to pay $115 million in restitution. His motion to remain free on bail pending appeal was granted.

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 charges of conspiracy, mail fraud, tax obstruction, and 13 counts of tax evasion 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 claimed that Daugerdas designed the tax shelters and earned $95 million in fees. The prosecution claimed that Daugerdas himself used the tax shelters to fraudulently reduce his tax liability from $32 million to $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.

At the suggestion of Field and Scott Univer, BDO’s then-general counsel, Skadden deleted the portion of the report relating to the possible IRS reactions to the tax shelter practices. 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 not disclosed 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.

Field’s defense attorneys used the deposition testimony of Univer and Goldberg to show 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, mail fraud, tax obstruction, and four counts of tax evasion. He was acquitted of seven counts of tax evasion. 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 June 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 Judge Pauley’s finding that Parse’s attorneys knew the juror had lied was “not supported by the record.”

The appeals court also rejected Judge Pauley’s finding that Parse’s lawyers had waived the issue for appeal because they failed to exercise due diligence to learn the facts about the juror.

The appeals court said, “We conclude that to the extent the district court found that Parse's attorneys knew [the juror] had lied, that finding is not supported by the record; and to the extent that the court ruled that Parse's right was waived because his attorneys failed to exercise due diligence to learn the facts, that ruling was based on an error of law.”

In November 2015, the prosecution and Parse entered into an agreement to defer prosecution of Parse for one year. Parse’s bond was cancelled and his passport was returned. One year later, in November 2016, the prosecution filed a motion to dismiss the charges. The motion was granted and the charges were dismissed.

Parse died in 2022.

– Maurice Possley

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Posting Date: 12/7/2016
Last Updated: 8/31/2022
Most Serious Crime:Tax Evasion/Fraud
Additional Convictions:Fraud
Reported Crime Date:2004
Sentence:3 years and 6 months
Age at the date of reported crime:42
Contributing Factors:Perjury or False Accusation
Did DNA evidence contribute to the exoneration?:No