By Theresa Schliep

Law360 (August 19, 2020, 5:52 PM EDT ) A New York federal judge won't reconsider a decision to deny compassionate release to an ex-Jenkens & Gilchrist PC lawyer imprisoned for orchestrating a $7 billion tax fraud scheme, saying that his COVID-19 diagnosis doesn't justify shortened prison time.

Paul Daugerdas received sufficient treatment for his infection at the southern Illinois facility where he is serving his prison sentence, and a novel coronavirus outbreak at that facility does not justify a review of the court's order denying him compassionate release, U.S. District Judge William H. Pauley III said in an order Tuesday. The court's decision in May to deny him release — but that recommended the prison release him temporarily — accounted for a potential outbreak at the prison, Judge Pauley said.

"Although this court is troubled by the recent COVID-19 outbreak at USP Marion, that 'change in circumstance' does not necessitate revisiting the May 1 order," Judge Pauley said.

The court discounted Daugerdas' argument that the risk of reinfection and lasting health consequences from his diagnosis both justified release, saying it was speculative and carried little weight.

In 2013, Daugerdas was convicted on conspiracy, tax evasion, impeding federal tax laws and mail fraud charges. At his sentencing, Judge Pauley said Daugerdas would be remembered as "the architect of the greatest tax fraud in U.S. history."

Daugerdas was one of several individuals ensnared in a wide-ranging tax evasion investigation focused on Jenkens & Gilchrist, a Texas law firm that was forced to shut its doors in 2007 following a nonprosecution deal with the government. Others charged in the fraud included former Jenkens lawyers Donna Guerin and Erwin Mayer, and several former partners at accounting firm BDO Seidman LLP.

The New York federal court found in May that, given the severity of those crimes and accounting for the risks posed by the coronavirus, Daugerdas wasn't entitled to early release from prison. But it recommended that the Federal Bureau of Prisons, or BOP, consider temporarily releasing Daugerdas, in light of the importance of reducing federal prison populations during the pandemic and the court's own insufficient authority to issue such releases.

Henry E. Mazurek of Meister Seelig & Fein LLP, counsel for Daugerdas, told Law360 on Wednesday that he's "imploring" the prison to grant Daugerdas temporary release, citing deleterious conditions at the prison. Inmates who tested positive for the coronavirus had received one meal a day and were sequestered in a recreation room, and Daugerdas received little medical attention other than temperature and pulse monitoring, according to Mazurek.

"We are disappointed that the courts are not taking a more progressive and humane role in, at least, moving nonviolent inmates to home confinement during this novel pandemic," Mazurek said. "Unfortunately, this court's view has been played out repeatedly in this country, especially imperiling the lives of our elderly inmates."

Daugerdas asked the court in April to permit him to serve the rest of his 15-year sentence under home confinement or to reduce his imprisonment to time served, arguing his age, diabetes and other health issues make him more susceptible to the effects of the novel coronavirus. But prosecutors argued that Daugerdas would actually be safer in his southern Illinois prison than in his Chicago suburban home, adding that he also hadn't exhausted his administrative remedies to pursue his release.

Out of around 1,200 inmates at the U.S. Penitentiary Marion in Illinois, where Daugerdas is imprisoned, 142 inmates have tested positive for the novel coronavirus, according to figures on the BOP's website. Two of those inmates have died, according to the BOP.

The BOP told Law360 it has been monitoring the spread of COVID-19 at Marion and all of its facilities, and has been managing the outbreak with screening, testing, treatment, prevention and education. It has also been following guidance from the Centers for Disease Control and reviewing inmates for release and home confinement to reduce the spread, according to the bureau.

"We are deeply concerned for the health and welfare of those inmates who are entrusted to our care, and for our staff, their families, and the communities we live and work in," a BOP spokesperson told Law360.

The U.S. Department of Justice didn't respond to a request for comment.

The government is represented by Stanley J. Okula Jr. of the U.S. Attorney's Office for the Southern District of New York.

Daugerdas is represented by Henry E. Mazurek and Ilana Haramati of Meister Seelig & Fein LLP.

The case is U.S. v. Paul M. Daugerdas, case number 1:09-cr-00581, in the U.S. District Court for the Southern District of New York.

--Additional reporting by Hailey Konnath, Craig Clough, Lauraann Wood and Kevin Penton. Editing by Vincent Sherry. 

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