Former Chicago lawyer Donna Guerin has pled guilty to charges of conspiracy to defraud the IRS and tax evasion. The former lawyer worked for Jenkens and Gilchrist, a Texas based law firm with offices around the country, and helped set up tax shelters for substantially wealthy clients in order to report losses on their income tax returns. The firm took a fee based on the tax losses reported on the tax returns, allegedly close to $95.7 million. In 2007, the firm admitted to selling fraudulent tax shelters and agreed to pay the IRS a $76 million penalty to settle the criminal investigation.
Guerin’s initial conviction was overturned in June when the U.S. District Judge William Pauley discovered one of the jurors had lied to the court about her past. The juror in question, Catherine Conrad was discovered to be a former attorney suspended for alcoholism. The first trial was called the largest tax-fraud prosecution in U.S. History by Judge Pauley, who presided over the 41 witnesses and 1,300 pieces of evidence for eleven weeks. The district attorneys were gearing up for a retrial when Guerin entered a guilty plea.
The former lawyer helped clients complete complex financial transactions that were illegal. Guerin would also draft opinion letters assuring clients that everything was legitimate with the deals. The tax shelters wiped away any financial gains for clients, allowing them to pay fewer taxes, or claim deductions. The ten year scheme created over a billion dollars in fraudulent losses. The IRS holds the individual responsible for fraudulent tax returns, not the preparer, which means that clients of the law firm could be facing large amounts of tax debt after the IRS adjusts their tax returns.
Donna Guerin is from Elmhurst, IL, and now faces a maximum ten year sentence. She has been ordered to pay $1.6 million and sell her Elmhurst home to satisfy the judgment. Her sentencing will take place on January 11th, 2013. Paul Daugerdas, Denis Field, and David Parse, other partners of J&G law firm have been charged similarly and the trials will begin in October of 2012 and April of 2013.