Countering Government Misinformation

Paul Daugerdas was found not guilty by the jury at his trial on three counts of personal tax evasion, which were charged against him. He was also found not guilty on six counts of tax evasion relating to transactions on which he advised clients. The transactions in which he and his clients engaged and for which he was acquitted were the same as the approximately 1,500 transactions on which he advised and that the prosecutors argued were included in a vast conspiracy for which they said he should be sentenced because they were illegal – even though that conclusion makes no sense in light of the acquittals.

The conspiracy charge on which Daugerdas was found guilty was clearly extremely limited in scope based on any reasonable interpretation of the verdicts that the jury rendered. It makes no sense that a huge conspiracy existed based on transactions that were of the same type as those that were the subject of not guilty verdicts, especially not guilty verdicts on personal individual transactions. The only four tax evasion charges on which Daugerdas was found guilty had one thing in common – they all involved corrections to investment transactions that the prosecutors argued were “backdating” – even though Deutsche Bank issued revised brokerage statements with “as if” transaction dates and there was no evidence presented that Daugerdas actually had any personal knowledge of the details of the documentation, which were handled by his associates, partners, paralegals, and secretary, as was his firm’s typical legal practice and as to which witnesses testified.

In addition to the fact that the not guilty verdicts clearly showed that there was no giant conspiracy, and that the guilty conspiracy verdict was based only on the four counts with documentation issues, the attorneys for Daugerdas conducted post-verdict interviews of jurors, who confirmed that the government “failed to prove its main case regarding the [alleged] tax shelter fraud against Mr. Daugerdas” and that there was “not enough proof to convict Mr. Daugerdas.” Further, “the jury agreed with the defense that Mr. Daugerdas acted in good faith when he used the tax shelters to avoid payment of taxes for himself and his clients.” The jurors said that the limited documentation issues were “the sole basis for all the convictions against Mr. Daugerdas, including the conspiracy counts.”

As further evidence of these conclusions, the jurors interviewed said that the jury acquitted Denis Field, the co-defendant of Mr. Daugerdas and the former chairman of BDO Seidman, because there was no evidence presented that he or his firm were involved with any of the dating and documentation issues.
In spite of the obvious conclusions evident from the decisions of the jury, the government nonetheless argued for an overarching conspiracy and urged that self-serving theory on the court and to the press.