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US judge orders retrial in tax fraud case

Wednesday, 06 June 2012   (0 Comments)
Posted by: SAIT Technical
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News 24 (SAPA)

New York - A federal judge ordered a new trial for three of four people convicted in the largest tax fraud prosecution in US history, saying a "pathological liar” who served as a juror had corrupted the trial.

US District Judge William H Pauley III said the juror had spoiled a three-month trial that included 41 witnesses and 1 300 exhibits and produced 22 million documents and 9 200 pages of trial transcript. He noted that the courts disbursed $110 569 for attendance and travel fees and jury meals during the trial.

At trial, a prosecutor said the defendants created tax shelters that benefited some of the "most well-heeled, richest investors in the world”, including the late sports entrepreneur Lamar Hunt, trust fund recipients, investors, a grandson of the late industrialist Armand Hammer and a man who was one of the earliest investors in Microsoft Corp.

The trial ended a year ago with convictions of two prominent lawyers - Paul M Daugerdas, and Donna M Guerin - along with Denis M Field, the former chief executive officer of the accounting firm BDO Seidman and former head of its national tax practice.

David Parse, a lawyer who also was convicted, will not get a new trial because his lawyers knew that the juror had lied about her background before the end of the trial but failed to inform the judge in time to replace her, the judge said.

Criminal records

"They gambled on the jury they had,” the judge wrote. "An attorney’s duty to inform the court about suspected juror misconduct trumps all other professional obligations, including those owed a client.”

The judge said he was ordering a new trial for the others because one juror made a "calculated, criminal decision to get on the jury” and made "breathtaking” lies about her background to do so.

He said the juror was a suspended attorney who hid her legal background, personal injury lawsuit filings, criminal records for herself and her husband and other facts, revealing a pattern of "sweeping dishonesty”.

He called the juror "a pathological liar who does not know the difference between truth and lie” and urged the government to prosecute her for perjury, saying it had "a strong incentive to punish such conduct and deter others”.

He said she made "deliberate and intentional lies”, eventually confessing that she wanted to make herself more "marketable” as a juror.

The judge said he was left with no option but to order a new trial when the juror revealed at a hearing after the trial that she believed most attorneys were crooks, "a direct statement of bias against the defendants”.

"We are, of course, pleased with Judge Pauley’s ruling. We share his ire that a juror’s dishonesty has been so injurious to the criminal justice process,” Charles Sklarsky, a lawyer for Daugerdas, said in response to a request for comment.


Daugerdas, the former head of the Chicago office of the Jenkens & Gilchrist law firm and its tax practice, was described by prosecutors at trial as the mastermind of the tax scheme.

Sharon McCarthy, a lawyer for Field, said his legal team was grateful for the ruling because the juror’s lies were breathtaking.

"To have allowed this tainted verdict to stand would have been extremely unjust,” she said.

Mark L Rotert, a lawyer for Guerin, said he was "pleased by the court’s ruling”.

A lawyer for Parse did not immediately respond to a request for comment. The government said it had no comment.



Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

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