October 23, 2018

Innocent Former BDO CEO Has a Bone to Pick With His Old Firm

If you aren't up on the no longer sordid tale of Denis Field, head here first and that'll get ya nice and caught up.

Well now that Mr Field's legal troubles are behind him at last, he's going all wolf-like on his former firm. He doesn't want much, maybe just an "I'm sorry" and for BDO to cover the legal fees it should have.

Here's the press release:

Former BDO Seidman Chairman Denis M. Field, who was exonerated last year following a prolonged legal battle in a major federal criminal tax shelter case, today announced he has filed a motion to vacate an arbitration decision in favor of BDO Seidman because it was based on fraud by the firm. In the motion, filed in New York State Supreme Court, Mr. Field alleges that the arbitration decision, which allowed BDO Seidman to avoid payment of Mr. Field’s legal fees over a period of more than six years, defrauded the arbitrator by failing to disclose material facts that would have affected the arbitrator’s decision.

On October 31, 2013, Mr. Field was acquitted of all criminal charges arising from the tax shelter practices of BDO’s Tax Solutions Group in United States v. Daugerdas. In that case, five former BDO partners pled guilty, and BDO itself acknowledged criminal wrongdoing in a deferred prosecution agreement that required BDO to pay a $50 million fine.

“Though I will never recover the time, effort and economic investment that have been lost due to this case, I am forever grateful that the jury’s verdict confirmed my innocence,” said Mr. Field. “As I work to rebuild my reputation and career, I am left with millions of dollars in legal fees. BDO’s dishonest behavior and abdication of responsibility must not be ignored. BDO abandoned me despite my innocence – it is time for the firm to acknowledge this failure and fulfill its commitment.”

In a shift from its longstanding practice of indemnifying current and former partners, in October 2007 BDO discontinued providing for Mr. Field’s legal fees, despite having made payments, consistent with its historical actions, until that time. As a result, Mr. Field was forced to pay millions of dollars in legal costs out of his own pocket, depleting his assets and leaving him with significant outstanding legal fees.

Mr. Field initiated an arbitration in April 2010 seeking to compel BDO to honor its agreement to advance his legal fees. BDO objected to paying Mr. Field’s legal fees on the grounds that Mr. Field withheld draft legal guidance, provided in 2001, that identified possible negative IRS reactions to certain BDO practices and procedures. BDO told the arbitrator that its alleged “discovery” of the legal draft in 2007 prompted its decision to discontinue payments to Mr. Field.

However, sworn testimony recently uncovered by Mr. Field’s legal team demonstrates that BDO’s Risk Management Committee was in fact well aware – as far back as 2001 – of the draft guidance. In concealing this central fact, BDO succeeded in deceiving the arbitrator in order to obtain a favorable award and avoid its commitment to provide for fees. In light of this evidence, today’s filing seeks to vacate the arbitration award because it was based on BDO’s fraud.

The cost of defending an individual in a complex white-collar case is extraordinary. Individuals rely on the promises made by their companies or firms to indemnify them for such legal costs. Reneging on such commitments makes it difficult, if not impossible, for individuals to mount a vigorous defense. Because BDO withdrew its financial support from Mr. Field, he was unable to ensure that his trial counsel was compensated for its efforts. In addition, because Mr. Field won a retrial and had to rely on court-appointed counsel in that retrial, BDO’s actions resulted in the government paying for legal fees that BDO, in the absence of its fraud on the arbitrator, would have been obligated to pay. In addition to fees already paid, Field owes more than $1 million in outstanding legal fees.

TL;DR: Denis Field thinks BDO weaseled out of paying his legal fees and big time. And he seeks REVENGE, muahahahahaha!!! Or at least for BDO to just admit they should have had his back instead of throwing him under the bus.

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