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Is backdating the fatal flaw for Daugerdas?

June 10, 2009

Looking over yesterday's tax shelter indictment of Paul Daugerdas and others, you can see opportunities for the defendants to argue that the IRS is trying to make them criminals for being aggressive advocates for clients in their tax practice -- merely for doing their jobs. That's debatable, but sometimes debatable is enough to avoid prison.

That's why this part of the government's case could be the most dangerous for the defendants:

In several instances in 2000 and 2001, J&G caused clients' tax shelter transactions to be incorrectly implemented at Bank A, which resulted in the wrong amount and/or type of tax loss to be generated for the clients. After the close of the tax year but before the respective tax return was to be filed, defendants PAUL DAUGERDAS and DONNA GUERIN, and Lawyer A, a co-conspirator not named as a defendant herein, discovered or were made ware of the errors and caused new transactions to be effectuated by Bank A through defendant DAVID PARSE and caused them to be backdated to the prior year.

If the government can prove backdating, it might be much easier for a juror to vote for conviction. Tax is hard, and a good defense lawyer has a lot of opportunities to give jurors a reasonable doubt in a case involving short sales, derivatives and currency options. But anybody can understand backdating. If the government convinces the jurors that backdating happened, it should be easier to sell the rest of the government's case.

The Tax Grrrl has more.

Tags: BDO.BDO Seidman.Paul Daugerdas.tax crime.tax shelters.