Lawyer Behind Biggest U.S. Tax Fraud Denied Covid-19 Release Bid

The perpetrator of the largest tax shelter fraud scheme in U.S. history doesn’t qualify for a compassionate release despite concerns about a prison outbreak of Covid-19, a federal district court judge ruled.

Paul M. Daugerdas is serving a 180-month sentence stemming from a fraud scheme that cost the Treasury Department more than $1 billion in tax revenue. Daugerdas orchestrated an “unprecedented” tax shelter fraud that netted him over $95 million and led to the collapse of Jenkens & Gilchrist, P.C., the law firm where he worked, according to court documents.

The U.S. District Court for the Southern District of New York rejected Daugerdas’s motion to reconsider a denial of early release. Daugerdas said he has tested positive for coronavirus. His Aug. 10 request for immediate release noted that more than 145 inmates and staff at the Illinois prison where he is incarcerated have tested positive.

Daugerdas’s motion described the virus as an “actual and present danger” to his health due to preexisting medical conditions including Type 2 diabetes and hypertension.

“Compassionate release to home confinement is the only way to protect Mr. Daugerdas from the mortal danger he faces under these prison conditions,” his attorneys wrote. “Indeed, it is not hyperbolic to state that Mr. Daugerdas now risks the possible death penalty for his non-violent tax-related crimes.”

The U.S. Justice Department opposed the request, noting that Daugerdas was isolated after his positive test and has been deemed to be asymptomatic.

This is the second attempt by Daugerdas to win an early release due to the pandemic. Judge William H. Pauley III in May rejected an initial request made before anyone had tested positive at the prison.

Pauley, in the Tuesday order, said that the prison outbreak and Daugerdas’s positive test don’t “move the needle” when it comes to reconsidering the compassionate release request. The judge noted that Daugerdas has received adequate medical treatment and his concerns about potential adverse future effects from the virus are too speculative.

Daugerdas is projected to be released from prison in July 2027, according to court documents.

Henry E. Mazurek of Meister Seelig & Fein LLP in New York, who represents Daugerdas, and the Justice Department didn’t immediately return requests for comment on the ruling.

The case is U.S. v Daugerdas, S.D.N.Y., No. 1:09-cr-00581, order issued 8/18/20.