10 December 2004 – LAWFUEL – First for law news – A lawyer who specialized in estate planning and tax matters was charged today with failing to report on his federal tax return the income he received as a result of misappropriating money from two trusts for which he was the trustee.
J
ames Roy McDaniel, 51, who maintained a law practice in Pasadena until he resigned from the California State Bar earlier this year, has agreed to plead guilty to the charge of subscribing to a false income tax return, a crime that carries a penalty
of up to three years in federal prison. While McDaniel has agreed to plead guilty
to one count related to his 2001 return, he acknowledges in court documents that he failed to report income over the course of five years, which caused the government to suffer a tax loss of approximately $667,368. McDaniel was the trustee of trusts belonging to the Longo family and a series of
trusts which belonged to members of the Simon family. McDaniel was also the general partner of the L. Simon Family Limited Partnership, for which the Simon Trusts were the limited partner. According to a plea agreement filed this morning in United
States District Court in Los Angeles, from 1997 through early 2003, McDaniel
withdrew funds without the consent of the Longo and Simon families from the Longo Trust and the Simon Partnership. McDaniel accomplished this by opening one
additional bank account for each entity and then wire transferring funds into those accounts from the main bank account. Once McDaniel wired these funds to the second accounts, he spent these monies on various personal expenses. Over the course of the five-year scheme, McDaniel misappropriated approximately $1,873,396 from the Longo Trust and the Simon Partnership. Among the funds withdrawn from the Simon Partnership were portions of the proceeds of its 1997 sale of a painting entitled
“Bords De L’Oise A Pontoise,” by Camille Pisarro.
McDaniel, who has resigned from the California Bar, is expected to make his first
court appearance later this month .
This case is the result of an investigation by IRS-Criminal Investigation Division
and the Federal Bureau of Investigation.
