Ex- Kirkland & Ellis Bankruptcy Partner Charged With Tax Fraud
Theodore L. Freedman, a former senior bankruptcy partner at Kirkland & Ellis, has been was charged with four counts of tax fraud in connection with false and fraudulent statements he allegedly made on his tax returns that resulted in more than $1 million in losses to the IRS. Among other things, the government contends, Freedman misrepresented his partnership income at the firm by approximately $2 million and fraudulently claimed over $500,000 in expenses for a sole proprietorship law practice that did not exist.
According to the indictment:
As a senior partner in the law firm’s New York office, Freedman received income that was calculated as a percentage of the firm's partnership income for a given year. The firm issued Freedman the IRS form that reports an individual partner's share of income or loss from the partnership. According to the form, Freedman's aggregate income for calendar years 2001 through 2004 was approximately $5,388,699.
Freedman self-prepared, signed, and filed tax returns for calendar years 2001 through 2004. Rather than reporting the true and correct amount of partnership income he received from the firm for these years, Freedman falsely and fraudulently under-reported his income in the aggregate amount of approximately $2,097,211.
In addition, Freedman also attached to each of his tax returns for those same years a Schedule C, which is supposed to report the amounts of income and expenses, and the resulting net profit or loss, for a taxpayer's self-owned business. On each of the Schedules C for these tax years, he falsely and fraudulently claimed to have sustained significant losses for a fictitious sole proprietorship – a legal practice – in the total aggregate amount of approximately $542,358. That sole proprietorship was fictitious.
In total, Freedman's false statements on his self-prepared returns resulted in a tax loss to the IRS of more than $1 million.