Federal prosecutors called the case "the largest criminal tax fraud in history." An alleged scheme by attorneys at a closed law firm, an accountant, and a banking professional at Deutsche Bank to set up fraudulent tax shelters, prosecutors said, resulted in those clients obtaining over $7 billion in illegal tax deductions and other unlawful benefits.
Yet, only five people appear to have been charged in regards to the "sprawling and massive fraud" alleged by the IRS. One was acquitted of all charges and a second, a Deutsche Bank CPA from Chicago, was acquitted of the most serious charges. The third defendant, a lawyer at the now-defunct law firm Jenkins & Gilchrist, was convicted in 2011 but was tainted by jury misconduct, so he will have to be retried.
The fourth defendant, another Jenkins & Gilchrist attorney, pled guilty to conspiracy and federal tax evasion in September. She was sentenced to eight years in prison and ordered to pay $190 million in restitution. The fifth, a former accountant at the BDO Seidman firm, was also convicted in 2011.
This week, news of the case centered on the sentencing hearing for the second defendant, the former Deutsche Bank CPA. The man, now 51, was tried in 2011, but was acquitted on the conspiracy and tax evasion charges. He was convicted, however, of mail fraud and obstruction of justice.
"[The CPA] used his professional acumen to help his wealthy clients make an end-run around the IRS, depriving the treasury of billions in tax revenue," argued the U.S. Attorney at sentencing. Federal investigators said he earned $3 million by selling the allegedly fraudulent tax shelters to clients.
Federal prosecutors had sought the same sentence -- 8 years in federal prison -- handed down to the woman who pled guilty. The defense, citing his obviously much smaller role in the alleged scheme, hoped he would not be required to serve prison time but only supervised release (the federal term for probation).
"I have tried to live my life...in a proper manner," the former CPA told the judge. "I regret not seeing things for what they truly were."
The judge ultimately determined the sentence should be three and 1/2 years in prison, three years of supervised release, and $1 million in restitution.
In cases of alleged white-collar crimes, the difference between criminal behavior and innocent mistakes is often based on a complex analysis of byzantine financial records and a certain interpretation of intricate and even convoluted federal regulations. The complex nature of income tax laws and legal requirements concerning offshore bank accounts, can subject a person to criminal prosecution and if convicted, a long term in prison. The state of mind of the accused is often a critical issue in the case. If you're ever accused of a financial or tax crime, it is essential to seek the counsel of an attorney who has substantial knowledge of how to defend a complex case involving tax, offshore bank accounts or other financial crimes.
Source: Thomson Reuters News & Insight, "Ex-Deutsche Bank banker gets 3-1/2 yrs prison in tax fraud," Bernard Vaughan, March 22, 2013