Ex-Wall Street Lawyer Pleads Guilty to Federal Tax ChargesChris Dolmetsch and Bob Van Voris
John J. O’Brien, a former lawyer at Sullivan & Cromwell LLP specializing in corporate mergers and acquisitions, pleaded guilty to charges he failed to pay income taxes.
O’Brien, 48, of Caroga Lake in the foothills of New York’s Adirondack Mountains, was charged in a misdemeanor criminal information yesterday in federal court in Manhattan. He entered his plea today before U.S. Magistrate Judge Henry Pitman and was released on a $100,000 personal recognizance bond with a week to secure a co-signer.
O’Brien earned about $10.8 million in partnership income for the tax years 2001 to 2008 and failed to file a federal tax return for each of those years, the government said. He used the unreported income to pay for personal expenses, including the purchase of a weekend home, funding of a rare-books business, Hudson Street Books, and international travel, prosecutors said.
“John O’Brien went to work every day at a prestigious law firm where he advised clients on how to comply with the law at the same time that he was knowingly breaking it,” Manhattan U.S. Attorney Preet Bharara said in a statement. “He thumbed his nose at the IRS to fund an even more lavish lifestyle than his generous income permitted.”
O’Brien, a 1992 graduate of New York University Law School, made more than $3 million in capital contributions to the rare-books business from 2004 to 2008 instead of paying income tax liabilities that totaled more than $2.5 million, prosecutors said.
O’Brien was charged with two counts of willful failure to file U.S. individual income tax returns and two counts of willful failure to pay tax. He pleaded guilty to all four and faces as much as one year in prison on each count at sentencing, which is scheduled for Nov. 16 before Pitman.
O’Brien agreed to pay no less than $2.8 million in restitution, representing the full amount of taxes and interest due to the Internal Revenue Service for the tax years 2001 to 2008, prosecutors said in a plea agreement. He has paid about $800,000 to the IRS, said his attorney, Russell Neufeld, during today’s hearing.
Neufeld declined to comment after the hearing. Karen Braun, a spokeswoman for Sullivan & Cromwell, declined to comment on the charges before today’s plea.
The case is U.S. vs. O’Brien, 11-cr-0652, U.S. District Court, Southern District of New York (Manhattan).
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