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TAX SHELTER GRAND JURY GOING AFTER LAWYERS?

January 25, 2006

The New York Times reports today that there may be more tax shelter indictments, this time targeting a group of Chicago lawyers:

Federal prosecutors are investigating three lawyers at a prominent Dallas law firm, Jenkens & Gilchrist, in a widening of an investigation into questionable shelters that shielded billions of dollars from taxes, according to people briefed on the inquiry.

The criminal investigation of the lawyers, now being heard by a grand jury in Manhattan, is a clear sign that the government is extending the investigation of tax shelters that it considers abusive beyond the case involving the accounting firm KPMG.

There is no indication that Jenkens & Gilchrist itself is a target of the investigation. Petri Darby, a spokesman for Jenkens & Gilchrist, said yesterday, "We are cooperating fully with the investigation."

Instead, the investigation is focused on three current and former tax lawyers based in the firm's Chicago office, the heart of its tax practice. They are Paul M. Daugerdas (pronounced DOG-er-dus), Erwin Mayer and Donna M. Guerin, according to the people who have been briefed on the investigation.

It's interesting that there was never any thought of going after the law firm, while the KPMG accounting firm was forced to throw a number of its people to the wolves under threat of indictment. Are accountants held to a higher (or less low) standard?

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