In 2007, Jenkens & Gilchrist, one of the country’s largest and highest-earning law firms, rocked the legal and financial worlds when, after an investigation by the Internal Revenue Service for perpetrating fraudulent tax shelters, the firm agreed to shutter its business and pay a $76 million fine.
“Jenkens & Gilchrist lawyers designed, sold, implemented and provided legal opinions for illegal tax shelters,” said Michael J. Garcia, US Attorney for the Southern District of New York, as the firm let go the last of its 600 attorneys and closed its flagship office in Dallas. “These fraudulent cookie-cutter shelters purported to…eliminate hundreds of millions of dollars in taxes owed by wealthy clients. They sounded too good to be true and they were too good to be true.”
Three years earlier, in 2004, Jones Swanson had begun representing four clients who had been defrauded by Jenkens & Gilchrist and its co-conspirators. After researching these schemes and the way that the firm and certain global banks had peddled them, Jones Swanson advised its clients not to take part in a class-action settlement with Jenkens & Gilchrist but instead to proceed in litigation with allegations of violations of RICO and state law against the law firm and its co-conspirators. This strategy paid off handsomely, resulting not only in several generous individual settlements, but also in a verdict of more than $6.5 million against one of Jenkens & Gilchrist’s co-conspirators.