UPDATE: Ex-Greenberg Traurig Lawyer Gordon Pleads Guilty

NEW YORK -- The former head of Greenberg Traurig LLP's tax practice pleaded guilty to criminal charges Friday in connection with opinion letters he wrote and referral fees he received in an allegedly fraudulent tax-shelter scheme.

At a hearing Friday, Jay I. Gordon, the one-time chairman of Greenberg Traurig's tax practice, pleaded guilty to conspiracy and corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws.

"In or about 1999 to 2004, I corruptly obstructed and impeded the administration of the internal revenue laws," Gordon said.

At the hearing, Gordon, 51 years old, admitted to failing to report fees he received for referring clients to a firm that developed, sold and implemented fraudulent tax-shelter transactions or evading taxes on those fees, as well as taking false deductions for unreimbursed business expenses. This occurred between 1999 and 2004.

He also admitted to writing opinion letters related to the shelter as part of a conspiracy that allegedly ran between 2000 and 2004.

Prosecutors had alleged he failed to report, or evaded taxes, on more than $649,000 in referral fees, according to court documents.

Gordon faces up to five years in prison on the conspiracy charge and three years in prison on the other charge. Sentencing is set for June 19, but that date could change.

In a statement Friday, Greenberg Traurig said, "We asked Mr. Gordon to leave the firm more than four years ago and reported him to the appropriate disciplinary committee. We cooperated fully with the federal investigation of Mr. Gordon."

He is cooperating with prosecutors in their probe of an allegedly fraudulent tax shelter that helped wealthy persons avoid paying more than $103 million in taxes.

Last month, prosecutors charged John B. Ohle III, who worked for a time as a supervisor for Bank One in Chicago and later co-owned Dumaine Group LLC in Chicago, with tax evasion and other charges in connection with the allegedly fraudulent shelter.

Dumaine Group was formed in February 2002 by Ohle with several former members of Bank One's Innovative Strategies Group after he left the bank. The ISG unit provided estate planning and tax-shelter strategies for wealthy clients.

Prosecutors have alleged that Ohle, between 2001 and 2004, conspired with lawyers at the now-defunct law firm Jenkens & Gilchrist PC to market a tax shelter known as Hedge Option Monetization of Economic Remainder, or Homer, to help high-net-worth individuals reduce or eliminate the amount of income taxes they would pay to the Internal Revenue Service.

The wealthy individuals were clients of Bank One and Jenkens & Gilchrist.

The Homer transactions resulted in taxpayers claiming about $429.5 million in false and fraudulent tax losses and evading more than $103 million in taxes, prosecutors said.

Deutsche Bank AG (DB) reportedly played a key role in the shelter through the sale of so-called "barrier options," or specialized foreign currency or bond options, that were integral to the transaction, a person familiar with the probe told Dow Jones Newswires last month. Deutsche Bank has previously declined comment.

-By Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com