United States Attorney
Southern District of New York
FOR IMMEDIATE RELEASE CONTACT: U.S. ATTORNEY’S OFFICE
JULY 14, 2011 ELLEN DAVIS,
PREET BHARARA, the United States Attorney for the
Southern District of New York, and CHARLES R. PINE, the Special
Agent-in-Charge of the New York Field Office of the Internal
Revenue Service, Criminal Investigation Division (“IRS-CID”),
announced that THEODORE L. FREEDMAN, a former senior partner at a
major international law firm (the “Law Firm”), was charged
yesterday in Manhattan Federal Court 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, FREEDMAN, 63,
misrepresented his partnership income at the Law Firm by
approximately $2 million, and fraudulently claimed over $500,000
in expenses for a sole proprietorship law practice that did not
exist. FREEDMAN voluntarily surrendered to authorities this
morning, and will be arraigned before U.S. Magistrate Judge JAMES
C. FRANCIS IV later today.
Manhattan U.S. ATTORNEY PREET BHARARA stated: “As
alleged, Theodore Freedman, an accomplished and well-compensated
attorney, abdicated his legal and ethical responsibilities by
cheating on his taxes. Just like every ordinary citizen,
privileged professionals have to pay their taxes too, and we will
continue working with our partners at the IRS to ensure that they
do.”
IRS Special Agent-in-Charge CHARLES R. PINE said: “To
build faith in our nation’s tax system, honest taxpayers need to
be reassured that everyone is paying their fair share. The IRSCriminal
Investigation Division, together with the Department of
Justice will investigate and prosecute those who violate our tax
system.”
According to the Indictment filed yesterday:
FREEDMAN was a senior partner in the New York office of
a major United States law firm, where he was a member of the Law
Firm’s restructuring group. In that capacity, FREEDMAN received
income that was calculated as a percentage of the Law Firm’s
partnership income for a given year. The Law 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.
As charged in the Indictment, 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 Law Firm for the years in
question, 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 selfprepared
returns resulted in a tax loss to the IRS of more than
$1 million.
* * *
FREEDMAN faces a maximum sentence of three years in
prison on each of the tax fraud counts, for a total maximum of 12
years in prison.
Mr. BHARARA praised the work of the Internal Revenue
Service, Criminal Investigation Division.
This case is being handled by the Office’s Complex
Frauds Unit. Assistant United States Attorney E. DANYA PERRY is
in charge of the prosecution.
The charges contained in the Indictment are merely
allegations, and the defendant is presumed innocent unless and
until proven guilty.
11-208 ###
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