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Ex-Morgan Stanley Tax Convict Seeks Release Due To Virus

By Dylan Moroses · 2020-04-03 15:22:22 -0400

A former Morgan Stanley attorney serving time in a federal prison for evading $45 million in taxes has asked a New York federal judge for early release to protect himself from the harmful effects of the novel coronavirus outbreak.

Representatives for Morris Zukerman, a former private counsel turned financier, told U.S. District Judge Analisa Torres on Thursday that he could die if he is not released from his 70-month prison sentence early under supervision. An inmate in the prison has tested positive for COVID-19, the respiratory illness caused by the coronavirus, the representatives have said. 

Staying incarcerated in New York's Otisville federal prison, where social distancing to help prevent the spread of the virus is impossible, could pose a severe threat to his health and perhaps even lead to his death, considering his preexisting health conditions, which include diabetes and obesity, the representatives for Zukerman said.

"In 2017, the court imposed a firm sentence on Mr. Zukerman for serious criminal conduct. But it did not intend to impose a potential death sentence," Zukerman's attorneys said in a letter to Judge Torres. "If Mr. Zukerman were required to remain in Otisville throughout the COVID-19 pandemic, it is not hyperbolic to say that could be the result."

Zukerman counsel Paul Shechtman told Law360 that the risks posed by the coronavirus at the prison have become a concern.

"We're confident that Judge Torres is taking this seriously," Shechtman said. "The irony here is that all the reasons a defense attorney in past years has wanted clients' sentences to be at a camp facility like Otisville is the very reason that Otisville is now a particularly a dangerous environment."

The government said in a letter to the court Wednesday that Zukerman should not be released because he did not follow the proper procedure to request the release with the Federal Bureau of Prisons, and his health record wasn't "fully developed" to support his arguments for release.

Furthermore, Zukerman's tax evasion crimes were too serious for him to be considered a candidate for release, the government said.

"The defendant, a Harvard-educated businessman, perpetrated a brazen, sophisticated, multiyear fraud scheme in order to evade approximately $45 million in taxes," the government said.

The government also highlighted steps that the federal prison system is taking to mitigate the spread of the coronavirus, such as quarantining inmates in their quarters for 14 days, and noted that Zukerman wasn't in an immediate health crisis.

Zukerman pled guilty to tax evasion in June 2016. Prosecutors had charged him with trying to avoid almost all of his tax obligations, starting with a $130 million sale in 2008 of a petroleum products company.

In March 2017, Zukerman was sentenced to 70 months in prison and ordered to pay a $10 million fine, a figure far exceeding the recommended maximum. Zukerman failed in his attempts to appeal the decision to the Second Circuit and U.S. Supreme Court.  

A legal representative for the U.S. government wasn't immediately available to comment.

Zukerman is represented by Paul Lewis Shechtman and Margaret Emma Lynaugh of Bracewell LLP.

The government is represented by Geoffrey S. Berman, Edward A. Imperatore and Stanley J. Okula Jr. of the U.S. Attorney's Office for the Southern District of New York.

The case is U.S. vs. Morris Zukerman, case number 1:16-cr-00194, in the U.S. District Court for the Southern District of New York.

--Additional reporting by Pete Brush, Elise Hansen and David Hansen. Editing by Neil Cohen.

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