The US Attorney for the Southern District of New York announced today another guilty plea in the BDO-Seidman-Jenkins & Gilchrist shelter promotion cases. Three BDO Seidman tax partners--Michael Kerekes, Adrian Dicker and Charles Bee--who had been involved in the shelters had already copped guilty pleas, so it's not to surprising that Robert S. Greisman, who was head of the accounting firm's "tax solutions group" from 1998 through 2004 and worked with the other three on the various deals, ended up pleading guilty as well.
The plea indicates that Griesman clearly knew better. He "knew" the shelters wouldn't be permitted without a reasonable possibility of a profit. He "knew" there wasn't such a possibility. And he new that the clients didn't have a real business purpose for the deals--just tax motivation. He even helped disguise the BDO Seidman tax shelter fees with a bogus consulting agreement. Altogether the BDO/J&G shelter deals invented "over one billion dollars in false and fraudulent tax losses, resulting in the evasion of over $200 million in taxes." Download Griesman Plea PR (July 9, 2009).
Griesman will be sentence in October and could get up to 13 years in prison and a fine of $750,000 (or twice the gross gain or loss on each count, if greater) as well restitution to the IRS on the charges.
I suspect these cases are getting the attention of practitioners and that there will be, at least for a while, more circumspection. Hopefully it will not be just a matter of beefing up the means of hiding the evidence--already, workproduct doctrine and privilege tend to make it very hard to get to the bottom of complex structures, especially when the courts interpret work product very broadly to cover almost anything in connection with tax planning, not just preparation for litigation, which is its origin.