The former tax preparer for Orleans Parish District Attorney Jason Williams said in federal court on Wednesday that he felt “pressure” from Williams and his former law partner Nicole Burdett to fraudulently inflate the expenses on Williams’ law firm’s tax returns between 2013 and 2017.
Henry Timothy, who prepared taxes for Williams dating back to 2010 and is the key witness in the government’s ten count tax fraud case against Williams and Burdett, said filing the fraudulent returns was not his idea.
But Timothy also said that neither Williams nor Burdett were specific about the deductions they wanted him to make — they only instructed him to reduce their overall tax liability. And he acknowledged under questioning from defense attorneys that it is the responsibility of a tax preparer to determine what are legitimate expenses to include in a tax return.
Timothy, who pleaded guilty to one count of tax fraud himself back in January of 2021, and is awaiting sentencing in front of U.S. District Judge Eldon Fallon, said that part of his plea agreement was that he would testify against Williams and Burdett.
“I understand that if I come here and tell the truth I will get some leniency on my case,” Timothy said, though he also said that nothing specific had been promised to him.
Williams and Burdett were indicted back in June of 2020 on 11 counts of tax fraud, one of which has since been dropped. Prosecutors allege that they pressured Timothy to inflate the business expenses of Williams’ law firm by hundreds of thousands of dollars over five years to reduce his tax burden by over $200,000. They also say that Williams failed to file necessary forms related to cash payments over $10,000.
Williams was New Orleans City Council president when the indictment came down, but had declared his intention to run for District Attorney on a progressive platform. He was elected in December of 2020, and took office shortly after. Williams has argued that the indictment was strictly political, and the IRS would have never investigated him if he wasn’t a public official.
If convicted of any of the 10 counts he is still charged with, Williams would likely have his law license suspended, and be forced to step down as DA.
‘I actually felt like I was helping them’
Timothy, 72, said that he met Burdett and Williams through his father-in-law, who was also a tax preparer, in 2010. At that time, Williams already had run into problems with the IRS. In 2007, they filed a lien against Williams for nearly $90,000 in tax debt he ran up between 2001 and 2003.
Williams told Timothy that he wasn’t happy with his previous tax preparer, and asked if he would be willing to take a look at the returns filed for his law firm dating back to 2002, and amend them. But Timothy said that WIlliams didn’t inquire about his background as a tax preparer, whether or not he was a certified public accountant, his education, or any other credentials.
Timothy agreed to amend the returns, and said he used a handwritten list of expenses given to him by Burdett or Williams to decrease their liability. He didn’t ask for any documentation to corroborate their legitimacy. After that, Williams began using Timothy to file his yearly tax returns for his firm, which continued until 2017.
Timothy testified that they soon fell into a routine. Each year he would get a profits and loss statement from Williams, through Burdett, which contained both business and personal expenses.
Initially, Timothy said that he would make all the legitimate deductions, and then take the bottom line Williams’ would need to pay to Burdett. Burdett would take it to Williams with the number.
If Williams was satisfied, they would file. But sometimes Burdett would tell him to “go lower.” At that point, Timothy would add personal expenses to the return, to reduce their liability further.
Timothy said that Burdett never specifically instructed him to inflate the business expenses using personal expenses. But he said that because he had already taken all the legitimate deductions, when she told him to lower the bottom line, that is what he took it to mean.
Eventually, Timothy said, he understood where the number needed to be, and there was less back and forth between him and Burdett. “In the latter years I more or less knew what to adjust and where to be, and would give her the number,” he testified.
Under questioning from Lisa Wayne, Timothy admitted that Williams never personally instructed him to do anything illegal. He said that was because he “never talked to him,” and everything went through Burdett.
Timothy told prosecutors that he regretted going along with it, and was “relieved” when he was informed by Burdett that he was being let go in 2017 because he “didn’t have to falsify any more tax returns.”
But he also said he felt a sense of benevolence by assisting in filing the inflated returns.
“I actually felt like I was helping them,” he testified. “Assisting them in not having to pay as much to the IRS.”
Timothy said that Williams and Burdett were not the only ones he inflated expenses for without having any corroborating information to know that those expenses were legitimate. He said that he would frequently sit with clients while preparing their returns, and if they asked him to increase expenses, he would do it.
Timothy would instruct his clients that they would need documentation if they were audited, but said he didn’t think he needed it and that “the burden was on them if they were ever audited.”
Burdett was among people passing along Timothy’s name. Prosecutors showed text messages between Timothy and Burdett where Burdett was attempting to get Timothy to prepare taxes for her uncle.
“Would you be willing to take him on?” Burdett wrote. “He’s self-employed and makes lots of money and has been paying out the ass!!!”
Timothy testified that he was not looking for new clients at the time, and did not take him on.
Cross-examination of Timothy will continue on Thursday at 8:30 am.