Monday, March 30, 2009

Accountant Pleads Guilty To Tax Fraud Relating To Tax Shelters

On March 17, 2009, Adrian Dicker, the former Vice Chairman and board member at a major international accounting firm, BDO Seidman LLP pleaded guilty today to conspiring with certain tax shelter promoters to defraud the United States in connection with tax shelter transactions involving clients of BDO Seidman and the now defunct law firm of Jenkens & Gilchrist. Dicker also pleaded guilty to tax evasion in connection with a multimillion-dollar tax shelter that Dicker helped sell to a client of BDO Seidman. This case is pending in Manhattan federal court. He is cooperating with the investigation.

According to Dicker's guilty plea, between 1995 and 2000, Dicker, a United Kingdom chartered accountant, was a partner in the New York office of BDO Seidman. Beginning in 1998 until 2000, Dicker was one of the leaders of the firm’s "Tax Solutions Group." The activities of the TSG were devoted to designing, marketing, and implementing high-fee tax strategies for wealthy clients, including tax shelter transactions.

Prosecutors alleged Mr. Dicker, who retired from the company in 2000 and served on its board until 2003, worked with others in designing and marketing two fraudulent tax shelters -- one known as the "short sale" transaction and another known as short options strategy, or SOS.

The shelters were designed, marketed and implemented by BDO Seidman and the now-defunct law firm Jenkens & Gilchrist PC, with the assistance of an unnamed foreign bank, the government said. The tax-shelter transactions created more than $1 billion in fraudulent tax losses, prosecutors said.

In June 2000, Mr. Dicker and two other leaders in the Tax Solutions Group obtained a compensation agreement from the firm in which they would be paid 30% of the net profits of the unit, which they shared equally, prosecutors said.

Dicker pleaded guilty to one count of conspiracy to defraud the IRS and one count of tax evasion. He faces a maximum sentence of five years in prison on the conspiracy charge and five years in prison on the tax evasion charge. On each count, the maximum fine is the greatest of $250,000 or twice the gross gain or gross loss from the offense. Restitution to the IRS can be imposed on all the charges. Dicker is scheduled to be sentenced on December 11, 2009, by United States District Judge Gerard E. Lynch.

The press release sets forth the details of the factual basis of the guilty plea:

Attorney Commentary: In this case, the facts showing that Dicker personally profited in a generous arrangement was probably one of the key pieces of evidence of why he chose to plead guilty since it would be used to show intent to defraud. Given the alleged loss amount, the maximum sentence in this case would be one that Dicker would have difficulty turning down. We should expect to see an increase in white collar cases where the government is being defrauded whether in tax or health care. It appears that the government wanted to portray Dicker as being the Madoff of tax shelters and there was a great deal of pressure on him to plea or face a trial with a potential lengthy prison sentence if he lost.

Any questions or comments should be directed to: Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of individuals, licensed professionals and businesses in civil, business, administrative and criminal proceedings.


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