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updated: 9/13/2012 4:08 PM

Lawyer from Elmhurst pleads guilty in huge tax fraud case

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Associated Press

NEW YORK -- A lawyer from Elmhurst pleaded guilty Thursday to helping wealthy clients dodge tens of millions of dollars in taxes in what prosecutors have called the largest tax fraud prosecution in history.

Donna Guerin, 52, entered the plea in U.S. District Court to conspiracy to defraud the United States and tax evasion, charges that carry a total of up to 10 years in prison. Sentencing was set for Jan. 11. She agreed to forfeit $1.6 million.

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Guerin, a former partner at the now defunct Jenkens & Gilchrist law firm, said she helped draft opinion letters to make it seem like wealthy clients were investing in legitimate business ventures when they were not.

"I knew in my heart then and I acknowledge to your honor today that many of our clients were only interested in reducing tax liabilities," she told Judge William H. Pauley III.

The judge asked her if she knew that what she was doing was wrong and illegal.

"I came to that understanding over time," she answered.

At a three-month trial last year, a prosecutor said the tax shelters from 1994 through 2004 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.

Prosecutors said the tax shelters produced more than $6 billion in phony tax losses that customers could use to reduce their tax obligations by tens of millions of dollars. One of several tax-shelter schemes was marketed from 1998 through 2000, producing at least $3.9 billion in bogus tax losses for at least 550 wealthy individuals, the government said.

After the trial, Pauley ordered a new trial for three of four people convicted in the case, saying a "pathological liar" who served as a juror had corrupted the trial.

Guerin was one of two lawyers awaiting a retrial. The other, Paul M. Daugerdas, of Wilmette, Ill., was described by prosecutors at trial as the mastermind of the tax scheme. Also awaiting trial was Denis M. Field, of Naples, Fla., the former chief executive officer of the accounting firm BDO Seidman and former head of its national tax practice. Both have pleaded not guilty. No retrial date has been set.

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