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July 10, 2014


Lawyer Gets 15 Years for Biggest Tax Fraud in U.S. History

Paul M. Daugerdas, a Chicago-area attorney and accountant, has been labeled by the government as history’s most prolific and unrepentant tax cheat. The judge overseeing Daugerdas’ case referred to the attorney as having “incredible greed.”

Daugerdas was then ordered to pay nearly half-billion dollars in restitution and forfeit $164 million in cash and property, including a lakefront Wisconsin home. Daugerdas was then sentenced to 15 years in prison following his conviction of conspiracy, tax evasion and mail fraud.

Although Daugerdas remained silent throughout his trial, outside of the courtroom he said he was “profoundly disappointed” and that it was a “sad day” for the criminal justice system.

Daugerdas used sophisticated and illegal tax shelters to shield some of the country’s wealthiest people from paying taxes on nearly $8 billion in gains, earning him more than $95 million from 1994 to 2004. Daugerdas attempted to use his tax shelters to claim he owed only $8,000 in taxes when really owed $32 million, according to U.S. District Judge William H. Pauley III. The government lost an estimated $1.6 billion in tax revenues as a result of the scheme.

“This case shows the astonishing lengths some super-wealthy Americans will go to avoid their obligation as citizens,” the judge said. “Mr. Daugerdas was a tax shelter racketeer who tapped into the incredible greed of some of the super-wealthy who didn’t want to contribute to the nation whose freedom made their huge financial successes possible.”

He added that Daugerdas found “willing customers in a sordid crowd of real estate tycoons, tire magnates, software developers, many others. None of them cared one bit about lying to the government.”

“The success of the scheme depended on the unethical and criminal behavior of highly educated and highly compensated professionals,” the judge said.

Daugerdas was acquitted of nine charges, and the judge cited them in rejecting the 20-year term prosecutors were hoping for, and called him the mastermind of the largest tax fraud in U.S. history.

Source: Neumeister, Larry, “Chicago Lawyer Gets 15 Years in Big Tax Fraud Case,” The Wall Street Journal, June 25th, 2014


Tax Evasion