Donna Guerin, 52, of Elmhurst, Ill., has pled guilty to conspiracy and tax evasion charges stemming from her work in fraudulent tax shelters that allowed her clients to claim billions in tax losses.

According to court records, Guerin was a partner at the Chicago law firm Altheimer & Gray between 1994 and 1998 and later moved with a small group of A&G attorneys to the newly formed Chicago office of Jenkens & Gilchrist, a Texas-based law firm with offices throughout the U.S.

Between 1996 and 2004, Guerin and other attorneys at J&G reportedly worked on the design, marketing and implementation of high-fee tax shelters that were designed to allow high-net-worth clients to cut taxes on significant income or gains. Guerin and other J&G attorneys worked with brokers from a financial institution, partners and employees of the accounting firm BDO Seidman, and other entities, in marketing and implementing “Short Sales,” “Short Options Strategy,” “Swaps” and “HOMER” shelters marketed and sold to hundreds of wealthy individuals from 1994 through 2002 and which combined generated almost $7 billion in fraudulent tax losses.

In return for receiving a fee from tax shelter clients based on a percentage of their purported tax losses, and the nature of the losses -- usually 5 percent for ordinary losses and 4 percent for capital losses -- Guerin and others at J&G assisted in implementing all of the stages of the tax shelters, including setting up bank accounts and entities such as corporations and partnerships. Guerin and others at J&G also provided the tax shelter clients a “more likely than not” legal opinion from J&G.

Details of Guilty Plea

According to the DOJ, during the guilty plea proceeding Guerin acknowledged that she knew that the tax shelter transactions would be allowed by the IRS only if there was a reasonable possibility of a profit and if the clients were entering into the tax shelter transactions for genuine, non-tax business reasons. She also acknowledged that the losses from the transactions would be allowed only if the clients were utilizing the entities involved in the tax shelters -- such as the partnerships and corporations -- for legitimate, non-tax business reasons, and not simply to produce tax losses.

Guerin admitted that she drafted false and fraudulent legal opinion letters as part of the implementation of the tax shelters, which were intended to be provided to the IRS to protect her clients from the imposition of penalties.

She faces a maximum sentence of five years in prison on the conspiracy charge to which she pled guilty, and a maximum sentence of five years in prison on the tax evasion charge. As part of her plea agreement, she agreed to forfeit $1.6 million to the IRS, and to sell her residence to effectuate that forfeiture. Sentencing is scheduled for January.

Guerin and co-defendants Paul Daugerdas, Denis Field and David Parse were convicted of various tax fraud charges in May 2011. Guerin, Daugerdas and Field were granted a new trial as a result of certain juror misconduct. Parse is currently scheduled to be sentenced on October 26, with the trial of Daugerdas and Field scheduled to begin in April 2013. Former J&G partner Erwin Mayer pled guilty to related charges of conspiracy and personal tax evasion in October of 2010.

In 2009, former BDO Seidman vice chairman and board member Charles W. Bee Jr., pled guilty to related charges of conspiracy to defraud the IRS, tax evasion and perjury; Michael Kerekes, BDO Seidman principal and a former member of BDO's TSG and Tax Opinion Committee, pled guilty to related conspiracy and tax evasion charges; Adrian Dicker, former vice chairman of BDO Seidman and TSG member, pled guilty to related conspiracy and tax evasion charges; BDO partner Robert Greisman pled guilty to related conspiracy, tax evasion and IRS obstruction charges; and BDO partner Mark Bloom pled guilty to a related IRS obstruction charge.