Page 3 - Lessons Learned from Getting to Not Guilty_FORTHEDEFENSE_vol4_issue4_2019

proceeds were immediately paid out to customers designed the tax shelters and drafted the legal
as winnings. That, of course, was a trial issue.
The argument that caused the court to take the
extraordinary step of dismissing the indictment
before trial was that the indictment failed to
allege a scheme to defraud. Regardless of what the
government might have thought of the amount
of money that the charities received, and even
regardless of whether the defendants lied to them
about certain material aspects of the arrangement,
an assertion that the defense emphatically denied,
the charities contracted for a fixed sum from each
bingo event, and they received precisely that sum.
Precedent in both the Second and Eleventh Circuits
holds that even under those circumstances—
which we would have disputed at trial—there is
merely a “scheme to deceive” and not a “scheme
to defraud.” It also did not hurt that, far from
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feeling victimized, all of the charities involved were
grateful to Mr. Jackson for hosting their events.
The key lesson learned in this case was to listen,
listen, listen to the client. The indictment was very
damning at first blush. But counsel remained open
to the client’s explanations and factual revelations
about how cash flows through a gaming business
and how gaming businesses contract with
sponsoring charities. In the end, the client—who
had an intimate knowledge of the facts—essentially
proved his innocence through his own advocacy
with counsel.
In U.S. v. Daugerdas, a case tried in the
6
Southern District of New York, five defendants who
had been involved in the design, marketing, and
sale of allegedly abusive tax shelters were charged
in 31 counts. The government claimed a tax loss of
$1.5 billion, calling it the biggest tax fraud case in
U.S. history. At trial, Sharon McCarthy represented
Denis Field, the former CEO of BDO, a major
accounting firm. After a three-month trial, all but
one defendant was convicted.
In a most extraordinary turn of events, the
convicted defendants, including Denis Field,
were granted a new trial after a juror in the trial
exhibited extremely bizarre behavior, both in a
post-trial letter written to one of the prosecutors
and later in a hearing, which showed her utter
bias towards the government. At the re-trial,
which took place in the fall of 2013, only two
defendants proceeded to trial: Paul Daugerdas,
a former partner at Jenkins & Gilchrist, who had
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40 For The Defense Vol. 4, Issue 4
opinions, and Denis Field. It was the government’s
theory that Mr. Field was responsible for the mass
marketing of the tax shelters to BDO’s clients, with
full knowledge that the shelters were abusive and
their use constituted tax fraud.
As any trial lawyer knows, a re-trial can be
painful. It requires defense counsel to double
down on efforts to find new avenues to attack the
government’s witnesses and theory, because the
government will be well-prepared to address any
evidence or arguments presented by the defense
at the initial trial. On the other hand, a re-trial
presents a rare opportunity to defense counsel,
because the government is essentially bound to
its witnesses’ prior testimony; any changes in that
testimony will result in damaging impeachment
on cross-examination. This is one way to view the
lemon of a re-trial as lemonade.
In re-grouping to try the case for the second
time, it was crucial to consider every idea the client
had for information that would be helpful to his
defense. In the heat of trial preparation, it is easy
to lose sight of the fact that it is the client who
has the best handle on the facts, and who can
point counsel in the right direction on how best
to marshal evidence contrary to the government’s
theory. With the benefit of time and the sting
of a conviction behind us, we were able to sift
through Mr. Field’s many ideas and find some
incredible gems. Once again, listening closely to
the client opened up new avenues to attack the
government’s case.
One pre-trial motion proved to be crucial in
developing new evidence for Mr. Field’s defense
in the re-trial. In response to subpoenas issued in
the first trial for documents related to legal advice
provided to BDO from outside law firms, certain
information, such as detailed billing records,
was withheld on the ground of attorney-client
privilege. The lack of this information hampered
our ability to prove that Mr. Field’s good faith
belief in the legality of the tax shelters was based,
in part, on the involvement of numerous lawyers
who provided advice to BDO over the life of the
alleged conspiracy. After the first trial ended, BDO
entered into a deferred prosecution agreement
with the U.S. Attorney’s Office for the Southern
District of New York, pursuant to which it
admitted to its involvement in the crimes charged