BDO Seidman Exec Pleads to Tax Fraud Charges
Charles Bee Jr., 63, a former Vice Chairman and partner of BDO Seidman, pled guilty last week to tax fraud charges from helping to create $1 billion worth of phony tax shelters for wealthy clients, as reported by WebCPA and The New York Post.
The charges against Bee are part of an investigation of a tax scheme which allowed BDO Seidman's clients to evade more than $200 million in taxes, according to the government. Bee was a member of BDO's Tax Solutions Group, which designed and marketed tax strategies and shelters to upper-income clients. The Group marketed the shelters with the Chicago office of the law firm of Jenkens & Gilchrist and with an international bank in New York.
The government has alleged that the the tax shelters were only allowed by the IRS if there was a reasonable probability of a profit. However, given the fees which BDO charged to its clients, it alleges that the tax shelters marketed by BDO had no reasonable probability of resulting in a profit.
BDO used an opinion letter created by Jenkins & Gilchrist to make it appear that their clients had a legitimate business purpose, containing allegedly false representations about the clients' motivations for entering into the transactions. The Tax Solutions Group also used a consulting agreement containing alleged false statements regarding the fact that the fees charged by BDO were solely for the tax shelters. Lastly, Bee and others are charged with causing clients to file false tax returns.
Bee pled guilty to one count of conspiracy to defraud the IRS for creating one false short option tax shelter for a client. He also admitted that he made false statements during a deposition in a Court of Federal Claims case.
Bee faces 15 years in prison, but prosecutors have promised to seek leniency if Bee cooperates in the investigation. BDO is cooperating with the government in its investigation. He has agreed to forfeit $20 million, as well as four residences in Florida and New Jersey.
Adrian Dicker, another former Vice Chairman of BDO, and Michael Kerekes, a principal of BDO, pled guilty to related conspiracy and tax evasion charges in February and March of this year.
