Ex-Sullivan & Cromwell Lawyer Gets 28 Months for Tax Crime

Jan. 11 (Bloomberg) -- John J. O’Brien, a former partner with the New York law firm Sullivan & Cromwell LLP specializing in mergers and acquisitions, was sentenced to 28 months in prison for failing to pay his income tax.

O’Brien, who earned about $10.8 million from 2001 to 2008, didn’t pay federal taxes or file tax returns for those years, according to the government. He used his unreported income to fund a rare-book business and for travel and a weekend home, according to prosecutors.

Calling it “a very odd case and a very troubling case,” U.S. Magistrate Judge Henry Pitman today rejected O’Brien’s request to avoid prison in a hearing in Manhattan federal court. As part of a plea agreement, O’Brien must pay $2.9 million in back taxes plus interest.

O’Brien, 48, is a graduate of Princeton University and New York University School of Law. He earned a masters degree in politics from the London School of Economics. He told Pitman today that he began neglecting his tax filings when he became a partner with Sullivan & Cromwell in 2001.

“By 2004 my problem had grown to be enormous and was only growing bigger,” O’Brien said.

The crimes committed by O’Brien, a gay man, were caused in part by a psychological disorder and by his relationship with an unstable partner, his lawyer, Russell Neufeld, said in court papers seeking leniency in sentencing. O’Brien poured $3 million of the money he made practicing law into his partner’s failing book business, Neufeld said.

O’Brien told Pitman today that he hopes to resume the practice of law in the future. He is the subject of a legal disciplinary proceeding in New York, Assistant U.S. Attorney Stanley Okula told the judge. Because he pleaded guilty to four misdemeanor charges, he won’t be automatically disbarred.

The case is U.S. v. O’Brien, 11-cr-0652, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Bob Van Voris in New York at rvanvoris@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.