After a seven-day trial that ended without the defense team calling a single witness, the criminal tax fraud case against Orleans Parish District Attorney Jason Williams and his former law partner, Nicole Burdett, went to a federal jury on Tuesday.
Attorneys for Williams and Burdett determined that the government had not proven its case against them in a 10-count indictment for allegedly falsely inflating Williams’ private law firm’s business expenses — reducing his tax burden by hundreds of thousands of dollars — and failing to file proper forms with the IRS related to cash payments from legal clients, and on Tuesday morning, they rested without calling any witnesses or introducing new evidence.
For the last week, U.S. attorneys with the Western District of Louisiana tried to make the case that Williams and Burdett sought out tax preparer Henry Timothy because they knew he would agree to fudge their taxes, and allegedly pressured Timothy to inflate the business expenses for Williams’ firm by more than $700,000 and reducing the taxes he owed by more than $200,000 between 2013 and 2017. They also argue the two willingly failed to file necessary forms related to cash payments over $10,000. (Burdett, who is Williams’ co-defendant, has also been separately charged with four tax-fraud counts related to her own income taxes, allegedly improperly reducing her own tax burden by about $130,000. Those charges are being tried simultaneously.)
Williams and Burdett have previously argued that the federal investigation and subsequent indictment were politically motivated. Though federal prosecutors have said investigators first began an inquiry into Williams in 2016, they have acknowledged that the tax probe was initiated in late 2018, shortly after he announced that he would run for DA on a progressive platform.
But the defense team agreed to leave those arguments out of the trial. For the past week, they have offered a much more straightforward defense: that they trusted Timothy to prepare legitimate tax returns and never instructed him to do anything illegal. Neither Williams nor Burdett have disputed that there were problems with the tax returns from the years in question. But the federal government had to prove that they knew that at the time they were filed, with the intent of defrauding the government.
By mid-afternoon on Tuesday, the 12-person federal jury had heard closing arguments from the two sides and were given instruction by U.S. District Court Judge Lance Africk as to how they should go about determining whether or not the pair is guilty of any of the charged counts.
The jury’s decision has the potential to dramatically impact the criminal justice system in New Orleans. If convicted on any of the counts — all felonies — Williams’ law license would likely be suspended and be forced to step down as DA, in addition to facing fines and potential prison time.
Timothy , the tax preparer, was the central witness in the government’s case. When he took the stand, over two days last week, he testified that Burdett and Williams insisted on inflating their deductions to reduce their taxes. He said that he tried to prepare legitimate tax returns for Williams at first, but that he and Burdett rejected them.
Timothy has himself pleaded guilty to tax fraud, and has a documented history of lying to federal agents and a federal grand jury. Under questioning from defense attorneys, Timothy acknowledged that he couldn’t provide any corroboration — including correspondence, drafts of tax returns, or witnesses aware of the conversations — that Williams and Burdett in fact were aware of the excessive deductions he was taking.
But during closing arguments, prosecutors said that Williams was highly knowledgeable about tax issues, and was pulling the strings when it came to the fraudulent returns.
“He was their pawn,” Assistant U.S. Attorney Kelly Uebinger said of Timothy. “He did their bidding. He was their perfect fall guy.”
In her closing statement, Lisa Wayne, defense attorney for Williams, called the prosecution’s case a “smear campaign,” and said that when Timothy found himself in his own tax troubles, he decided to turn on what he realized was a “high profile client” in exchange for a deal.
“What did he think?” Wayne asked the jury. “ He thought: ‘I’m going to give him up. Because surely I’m going to get a benefit.’”
During his testimony Timothy also acknowledged that he was looking for leniency from the government in his own case, but said that he wasn’t promised anything specifically, and insisted that he was only giving them the truth about Williams and Burdett.
“You should be indignant that the government put that man on the witness stand,” Mike Magner, attorney for Burdett, told the jury during his closing. “It’s crazy.”
Attorneys for Williams and Burdett also argued that investigators with the IRS did not do enough to corroborate Timothy’s story given his history of lying. The lead investigator, Tim Moore, did not search Timothy’s computer, subpoena the tax software company that he used, pull phone records, or interview any other of Timothy’s clients.
“Why don’t you want to hear the truth?” Wayne asked of investigators. “Is it because you’re afraid? Is it because the others might have also said they didn’t know he was … cheating on my behalf?”
Magner called it “astounding” that the government chose not to search Timothy’s computer.
“The government did not pursue the evidence, did not pursue the truth, but rather they pursued an individual,” Magner said, pointing to Williams.
But Uebinger said there was no way Williams and Burdett were not aware of all the personal expenses that were being deducted, and that their spending habits showed it.
“He’s blowin’ and goin’ and swiping that card,” Uebinger said, showing Williams’ credit card transactions. “He knows that the [personal expenses] are being run through the business.”
Prosecutors also showed a note from Burdett to Timothy that said Williams wanted his mother to be put on his returns as a dependent. Uebinger argued that the instruction from Williams showed that he was in control of what went on the returns.
“It’s not reasonable for you to conclude that Mr. Timothy did these things without their knowledge, year after year after year,” Uebinger said. “They knew exactly who they were dealing with.”
The charges against Williams and Burdett for failing to file tax forms related to cash payments over $10,000 — form 8300 — are the first to be brought in the Eastern District of Louisiana in the last 50 years, at least. Williams and Burdett say they had no idea they were even required to file the forms for any payments — and lawyers for the pair argued that the payments they are charged with are particularly confusing.
Two of the payments were for clients brought in by Robert Hjortsberg, an attorney with the firm who had a fee-sharing agreement. Magner and Wayne said that when Hjortsberg’s cut was taken out, the payment to the firm was actually below the $10,000 threshold. Another “cash” payment was made by cashier’s checks, which the defense said caused additional confusion. And a final payment was in fact a series of payments made by a single person related to two separate criminal cases that Williams’ firm handled.
The government did not claim that the failure of Williams and Burdett to file the forms directly reduced their tax liability or saved them any money. The forms exist so the IRS and the FinCEN have records in order to protect against money laundering and other financial crimes.
Initially, Williams and Burdett were charged with five counts of failing to file 8300s. But last month, prosecutors voluntarily dismissed one of the initially charged counts when they were provided evidence that it was in fact just an improperly characterized transaction, leaving the four remaining.
On Monday evening, defense attorneys filed motions to have two more of those counts dismissed.
As with the fraudulent deduction charges, prosecutors must show that Williams and Burdett acted willfully, deciding not to file the forms.
The jurors indicated that they would deliberate until 6pm on Tuesday. If they are not able to reach a verdict before then, they will continue in the morning.