This NY Times article reports on a scrape that Dallas-based law firm Jenkens & Gilchrist got into with a New York judge over an unauthorized letter that the firm recently sent to clients who bought tax shelters that the firm promoted. Here are earlier posts on Jenkens & Gilchrist’s tax shelter-related problems.
Jenkens & Gilchrist agreed in March to pay $75 million in settlement of a class-action lawsuit that had been brought on behalf of over 1,100 clients of the firm who had bought the disputed tax shelters. The settlement included some provisions for protecting the clients’ identities in court records that would be available to the general public.
However, in a letter that Jenkens & Gilchrist sent to its clients on May 28, the law firm offered the opportunity to stay completely out of the public record of the case by accepting just $100 from the firm rather than each client’s share in the $75 million settlement.
That offer went over about as well as a fart in church with the judge in the class action case. U.S. District Judge Shira A. Scheindlin sent a rather unusual letter of her own yesterday to the 1,100 Jenkens & Gilchrest clients instructing them that they should ignore the Jenkens & Gilchrest letter because she had not approved it as part of the settlement.
A lawyer representing Jenkens & Gilchrist said yesterday that the firm had withdrawn the offer to its clients contained in the letter and that the whole affair had been a big misunderstanding.
I guess so.
However, none of these machinations over the proposed class settlement will hide the Jenkens & Gilchrist clients’ identities from the Internal Revenue Service. In May, U.S. District Judge James Moran ordered the firm to turn over the names of all its tax shelter clients to the I.R.S.