David Parse, a former Deutsche Bank AG (DBK) accountant, was sentenced to three and a half years in prison for his role in what prosecutors claim is the biggest criminal tax-fraud prosecution in history.
Parse, 51, was convicted in 2011 of mail fraud and obstructing the Internal Revenue Service as part of a scheme to market fraudulent tax shelters that the U.S. said cost the Treasury more than $230 million in lost taxes. He was sentenced today by U.S. District Judge William Pauley in Manhattan.
“Parse played a central and longstanding role in the criminal scheme,” Pauley said before announcing the sentence.
Parse was accused of being a key actor in a fraud that created more than $7 billion in illegal tax deductions and benefits. He made $3 million in commissions from the fraud, according to the government.
In addition to the prison time, Pauley sentenced Parse to three years of supervised release, $115.7 million in restitution and $1 million forfeiture.
Prosecutors had urged Pauley to give Parse a similar sentence to the eight-year prison term he handed former Jenkens & Gilchrist lawyer Donna Guerin this month.
Parse’s lawyer, Paul Shechtman of Zuckerman Spaeder LLP, told Pauley in a March 7 letter that his client “was at the periphery of the Jenkens scheme” and shouldn’t be sentenced to prison. Parse submitted at least 20 letters from family and friends asking for leniency.
“He wasn’t a tax lawyer. He did not design these shelters. He did not market them,” Shechtman told Pauley today.
A Manhattan jury in May 2011 returned guilty verdicts against Guerin and Paul Daugerdas, both former Jenkens & Gilchrist lawyers; Denis Field, the former chief executive officer at accounting firm BDO Seidman LLP; and Parse, who worked for Frankfurt-based Deutsche Bank’s Alex. Brown unit. The jury acquitted Parse of four of the six counts against him.
Craig Brubaker, a second former Alex. Brown accountant, was found not guilty of all charges.
The 10-week tax-fraud trial generated 9,200 transcript pages of testimony from 41 witnesses. Lawyers introduced 1,300 pieces of evidence.
In June, Pauley granted a new trial for Parse’s three convicted co-defendants after a juror disclosed that she lied about her past, including that she was an alcoholic and a suspended attorney, to get on the jury.
The judge let Parse’s conviction stand, ruling that his lawyers from the New York firm Brune & Richard LLP failed to reveal information they had about the juror, Catherine Conrad.
Pauley ruled that Conrad’s presence on the jury deprived Parse’s co-defendants of a fair trial, but said that Parse’s lawyers had waived the issue. Pauley also denied Parse’s request for a new trial on the ground that his lawyers were inadequate. Shechtman represented Parse after the Brune & Richard lawyers.
Pauley today rejected Shechtman’s argument that a letter sent by Conrad to one of the prosecutors in the case shows that the jury convicted him for back-dating three transactions for tax purposes, rather than for his participation in the wider scheme.
“Conrad simply cannot be relied on for anything of importance,” said Pauley, calling her “a monstrous liar.”
Pauley allowed Parse to remain free on $500,000 bond while he appeals his conviction.
Guerin pleaded guilty in September to one count of conspiracy and one count of tax evasion rather than face a second trial.
The case is U.S. v. Daugerdas, 09-cr-00581, U.S. District Court, Southern District of New York (Manhattan).
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