"MICHAEL J. GARCIA, United States Attorney for the
Southern District of New York, announced today that his Office
has entered into a non-prosecution cooperation agreement (the
"Agreement") with the law firm Jenkens & Gilchrist ("J&G") for
criminal tax violations arising from J&G's tax shelter
activities. In a statement to the United States Attorney's
Office for the Southern District of New York (the "Office"), J&G
admitted to developing and marketing fraudulent tax shelters, as
well as to issuing fraudulent opinion letters.
This decision by the Office was based on four principal
factors: J&G's inability to continue practicing law as a firm;
J&G's acceptance of responsibility for developing and marketing
fraudulent tax shelters, and for rendering fraudulent opinions in
connection with those shelters; J&G's cooperation with the
Government's investigation into the tax shelter activities of the
firm and its individual lawyers; and J&G's entry into an
agreement with the Internal Revenue Service ("IRS") to resolve
the IRS's promoter penalty audit of J&G, including the payment of a civil penalty.
J&G has recognized, in its statements to this Office
and in the Agreement, that its tax shelter practice has caused
serious damage to its reputation, revenues and stability, and
that as a result it ultimately cannot continue in business. It
was once a thriving firm with over 600 attorneys and offices
across the nation. Approximately two-thirds of those attorneys
left, and its revenues declined sharply, as Government scrutiny
of the firm's tax shelter practices intensified, as civil suits
were filed, and as the firm's reputation was accordingly
tarnished. The firm has advised the Office that it has recently closed several of its offices, that it will be closing the last
of its offices -- its flagship office in Dallas -- at the end of
the month, and that J&G will no longer engage in the practice of
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