A former BDO Seidman partner faces up to
10 years in jail after pleading guilty to conspiracy to defraud the
US tax system and helping investors avoid paying $200 million in
tax through a tax shelter scheme.
Michael Kerekes pleaded guilty to one count of
conspiracy to defraud the US Inland Revenue Service (IRS) and one
count of tax evasion at the Southern District of New York in
Manhattan, according to the US Department of Justice.
Between 1998 and 2008, Kerekes was an attorney
and a principal at BDO Seidman and from 1998 until 2003 he was a
member of the firm’s tax solutions group (TSG). The group designed
and implemented high-fee tax strategies, including shelters, for
Kerekes and his co-workers caused the clients
to file false and fraudulent tax returns reporting the tax benefits
flowing from the shelter transactions, the US Department of Justice
In total, the fraudulent tax shelter
transactions implemented by Kerekes, his accounting firm, a law
firm Jenkens & Gilchrist, and the financial institution that
assisted them, caused clients to report more than $1 billion in
false and fraudulent tax losses. This resulted in the evasion of
more than $200 million of taxes due to the IRS.
BDO Seidman said in a statement the TSG was
dissolved by the firm several years ago.
“BDO Seidman has co-operated fully with the
government’s investigation and will continue to do so. The firm
does not intend to comment further,” the statement said.
Kerekes faces five years prison for conspiracy
and five years prison for tax evasion. He is due to be sentenced on
4 March 2010.