Bloomberg News

Ex-BDO Seidman Manager Pleads Guilty Over Tax Shelter

March 17, 2009

A former vice chairman and board member at accounting firm BDO Seidman LLP pleaded guilty in federal court in Manhattan to conspiracy to defraud the U.S. and tax evasion.

Adrian Dicker, 54, who served as a manager and partner in the firm’s tax practice, admitted today to operating a conspiracy with other top firm executives from 1998 to 2003, in a scheme which the U.S. said helped generate more than $1 billion in fraudulent tax losses.

Dicker, of Princeton, New Jersey, told U.S. Magistrate Judge Theodore Katz today that he was the manager of the firm’s “Tax Solutions Group.” He was accused of helping market tax shelters to wealthy clients, and worked with now-defunct law firm Jenkens & Gilchrist and an unnamed foreign bank to execute the transactions, according to the plea agreement.

“I failed in my responsibilities and turned a blind eye,” Dicker told Katz. “I fully accept my responsibilities for what I have done. What I have done did not meet the appropriate standards of social responsibility.”

Cooperating Witness

Dicker is the latest guilty plea in what the federal government said today is a continuing tax-shelter investigation. In February, Michael Kerekes, who worked as a partner at BDO Seidman’s Los Angeles office from 1998 to 2008, pleaded guilty to conspiracy to defraud the U.S. and tax evasion.

Both Dicker and Kerekes face a maximum of five years in prison on each of the two charges. Dicker’s sentencing is scheduled for Dec. 11 before U.S. District Judge Gerard Lynch, Katz said today.

Dicker is cooperating with the government’s investigation and agreed to testify, Assistant U.S. Attorney Stanley Okula said today in court. If Dicker satisfies the terms of his plea agreement with the government, prosecutors could recommend he receive a more lenient sentence, Katz said.

Described in charging documents as a “leader” at the firm, Dicker allegedly participated in the conspiracy with an unidentified head of BDO Seidman’s national tax practice who later became the firm’s chief executive officer.

Former CEO

Jerry Walsh, a spokesman for BDO Seidman, said in an e- mailed statement that the firm is cooperating with the government’s investigation. He declined to comment on the identity of the unnamed former CEO.

Dicker “was a member of a group of partners within the firm that marketed tax shelter products,” Walsh said in the statement. “That group was dissolved by BDO several years ago. The firm does not intend to comment further on this matter.”

Dicker, an accountant from the U.K., was a partner in the firm’s New York office between 1995 and 2000, prosecutors said. He served on the BDO board of directors from early 1999 through October 2000, and after his retirement from the firm, he served as a retired partner director, prosecutors said.

The government said in court papers that the unidentified CEO “doled out” additional bonuses to certain BDO employees from profits earned as a result of these tax shelter products, promoted using a “Tax $ells” logo to generate more sales. Dicker said today in his plea agreement that he and others at BDO Seidman fabricated business documents justifying the shelters.

$1 Billion

Federal prosecutors in the office of Manhattan U.S. Attorney Lev Dassin said the tax shelters Dicker and Kerekes helped promote, including one known as the “short sale transaction,” generated more than $1 billion in false tax losses and allowed BDO Seidman’s clients to evade more than $200 million in taxes.

Dicker said today in court that he “knowingly included tax opinions to clients that were likely to be false.” He said BDO Seidman touted the tax shelters as “value-added products” to generate fees far beyond normal hourly billing rates. He earned more than $6.7 million in profits from the sales of these shelters in addition to his salary, the U.S. said in court papers.

He described traveling to San Diego to visit an unidentified client whom he persuaded to purchase such a tax shelter. As a result, the U.S. government didn’t receive the $6.7 million which the client should have paid otherwise, he said.

Kerekes said in his guilty plea that the firm’s tax shelter group was formed by the firm’s leadership to design, market and implement high-fee tax strategies.

Dallas-based Jenkens & Gilchrist, which once had 600 lawyers, closed in 2007 after reaching an accord with authorities to avoid prosecution for selling tax shelters that generated more than $1 billion in phony losses.

Dicker remains free on a $100,000 bond, Katz said. His lawyer, Laura Gavioli of Sonnenschein Nath & Rosenthal LLP, declined to comment after court.

The case is U.S. v. Dicker, 09-CR-00238, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporters on this story: David Glovin in New York federal court at dglovin@bloomberg.net; Patricia Hurtado in New York federal court at pathurtado@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.


We Almost Lost the Nasdaq
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus