March 5, 2004

Jenkens & Gilchrist, P.C. Law Firm to Pay $75 Million
To Settle All Tax Shelter Claims
Claims Will Proceed Against Accounting Firms, Investment Banks & Others

Birmingham, AL - Attorneys from the Birmingham, Alabama law firm Whatley Drake, L.L.C.  in conjunction with the Dallas law firm of Shore*Deary, L.L.P. and Cory Watson Crowder & DeGaris, P.C. also of Birmingham announced that the national law firm of Jenkens & Gilchrist, P.C. has agreed to pay $75 million in a class action settlement to resolve all claims against the firm related to its tax shelter work.
 
Whatley Drake & Kallas LLC is part of a team of tax litigation attorneys currently representing approximately 100 individuals who paid millions of dollars in fees for tax strategies that the IRS has held as invalid.  The settlement with Jenkens & Gilchrist will not affect claims against the other accounting firms, law firms and investment firms that marketed and sold a variety of invalid tax strategies.
 
Today's settlement stems from two class action lawsuits filed in New York federal courts.  In one case, an Indianapolis entrepreneur is facing an IRS audit after entering into a "COBRA" tax shelter that his advisors told him would save $13 million in taxes in exchange for $7 million in fees.  Individuals in the other class-action entered into a similar tax strategy, and are also being audited by the IRS.
 
Whatley Drake & Kallas LLC's clients are seeking to recover millions of dollars in fees they paid for invalid tax strategies, as well as $1 billion in punitive damages based on claims that those who marketed and sold the tax strategies knew they were invalid. 

Plaintiffs' counsel Joe Whatley said "We are pleased with the result of this partial settlement and look forward to pursuing our clients' claims against the remaining defendants." Claims are continuing against the German-based investment banking firm Deutsche Bank, Bank One Corp., Wachovia Corp./First Union Corp., accounting giants Ernst & Young, KPMG, and BDO Seidman, New York investment firm Bricolage Capital, and the law firm of Sidley Austin Brown & Wood of Chicago, among others. 

According to the claims, the targeted entities devised, marketed and sold invalid tax strategies to hundreds - perhaps thousands - of individuals in exchange for millions of dollars in fees.