Department of Justice Drops Tax Fraud Case Targeting Billionaire

THE CHALLENGE

Our client, a prominent member of the Forbes 400, was targeted for criminal prosecution by the IRS and the Department of Justice in a $60,000,000 gift tax fraud case, the largest of its kind ever pursued by the government. He would have been a large trophy for the prosecutors and agents involved in the case, and they pursued him vigorously.

To make matters more challenging, at roughly the mid-point of the investigation, our client began to draw media attention. While journalists were focused on the positive aspects of his career and business dealings, the interest increased the likelihood that news of the criminal tax investigation would leak.

OUR APPROACH

We quickly assembled a team of attorneys and experts, reviewed all relevant documents, and interviewed potential witnesses, including our client’s family office staff, outside accountants, and attorneys. As we completed our initial investigation, it became clear that there would be no dispute with the government regarding facts and that the case would turn on highly technical aspects of tax law, tax procedure and our client’s intent. We also determined that there would be no downside associated with providing the government full access to our documents and witnesses.

We fully cooperated with the government during its investigation. We allowed agents and prosecutors to tour our client’s family office and interview his staff. We provided all documents that the government requested informally, as well as through administrative summonses and grand jury subpoenas.

While the government performed its investigation, we worked with our experts and fine-tuned our position regarding the contentious technical aspects of the case and the intent element. We made multiple presentations to the government including high-level decision-makers at the Department of Justice. Our cooperation created an environment of trust and made key government decision-makers more receptive to fully considering our position.

When journalists began to contact our client, we engaged strategic communications experts under the umbrella of attorney-client privilege and developed a plan for minimizing the risk that news of the investigation would leak and for protecting our client’s reputation in the event of a leak.

THE RESULT

We persuaded the Department of Justice to close its investigation and declined prosecution of our client. News that our client was targeted in a criminal tax investigation never leaked.