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December 10, 2004
TAX LAWYER WHO ADMITS STEALING FROM CLIENTS AND FILING FALSE TAX RETURNS
AGREES TO PLEAD GUILTY
A lawyer who specialized in estate planning and tax matters was charged today
with failing to report on his federal tax return the income he received as
a result of misappropriating money from two trusts for which he was the trustee.
James Roy McDaniel, 51, who maintained a law practice in Pasadena until he
resigned from the California State Bar earlier this year, has agreed to plead
guilty to the charge of subscribing to a false income tax return, a crime that
carries a penalty of up to three years in federal prison. While McDaniel has
agreed to plead guilty to one count related to his 2001 return, he acknowledges
in court documents that he failed to report income over the course of five
years, which caused the government to suffer a tax loss of approximately $667,368.
McDaniel was the trustee of trusts belonging to the Longo family and a series
of trusts which belonged to members of the Simon family. McDaniel was also
the general partner of the L. Simon Family Limited Partnership, for which the
Simon Trusts were the limited partner. According to a plea agreement filed
this morning in United States District Court in Los Angeles, from 1997 through
early 2003, McDaniel withdrew funds without the consent of the Longo and Simon
families from the Longo Trust and the Simon Partnership. McDaniel accomplished
this by opening one additional bank account for each entity and then wire transferring
funds into those accounts from the main bank account. Once McDaniel wired these
funds to the second accounts, he spent these monies on various personal expenses.
Over the course of the five-year scheme, McDaniel misappropriated approximately
$1,873,396 from the Longo Trust and the Simon Partnership. Among the funds
withdrawn from the Simon Partnership were portions of the proceeds of its 1997
sale of a painting entitled "Bords De L'Oise A Pontoise," by Camille
McDaniel, who has resigned from the California Bar, is expected to make his
first court appearance later this month.
This case is the result of an investigation by IRS-Criminal Investigation
Division and the Federal Bureau of Investigation.
Release No. 04-155