Lateral movement among law firm partners and associates has boomed. In 2020, the number of associates moving firms was up 149% and the number of partners moving was up almost 43%. [1] In 2021, the number of lawyers switching firms was up 111% over 2020. [2] And the lateral market for bankruptcy lawyers is no stranger to the boom, despite bankruptcy filings having sat at record low numbers over the past few years. [3]
A federal grand jury in Newark, N.J., yesterday unsealed an indictment charging the operator of a New Jersey construction business with tax evasion, employment tax crimes, aiding the filing of false tax returns, and making false statements in bankruptcy, according to a DOJ press release. According to the indictment, Zeki Donuk, of Landing, operated a construction business first under the name Titan Builders LLC and later as Titan Steel Construction LLC (collectively, “Titan”). From at least 2016 through 2019, Donuk allegedly cashed checks payable to Titan instead of depositing them into business bank accounts. Donuk allegedly concealed the cashed checks and did not report them either as gross receipts on Titan’s corporate tax returns, or as income on his or his wife’s personal returns. According to the indictment, from the third quarter of 2016 through the third quarter of 2017 Donuk also did not collect, account for, or pay over to the IRS employment taxes on behalf of Titan’s employees, despite a legal obligation to do so. For those quarters, Donuk allegedly did not file quarterly employment tax returns on behalf of the businesses. The indictment charged that in 2019, Donuk allegedly made false statements on documents he filed in a personal bankruptcy case. Specifically, Donuk allegedly concealed from the bankruptcy court that he owned a vacation property in Pennsylvania, had signatory authority over certain bank accounts, owed tax debts to the IRS, and operated his construction business as Titan Builders and Titan Steel. If convicted, Donuk faces a maximum penalty of five years in prison on each count of tax evasion, employment tax violations and bankruptcy fraud charges, and a maximum penalty of three years in prison on each of the counts of aiding or assisting the filing of false tax returns. He also faces a period of supervised release, restitution and monetary penalties.
The president of the Federal Reserve Bank of Atlanta is under investigation after saying that he unintentionally did not disclose certain transactions on financial disclosure forms, The Hill reported. Raphael Bostic, who has been the head of the bank since 2017, said in a statement that he has ensured since taking office that his assets were managed in accounts that he and his personal investment adviser did not have the ability to direct. But he said he has learned that the transactions third parties carry out should be listed on his annual financial disclosure forms, not just the assets themselves. He said that he was unaware of specific trades and their timing because of his reliance on a third-party manager. A “limited” number of trades happened during Federal Open Market Committee blackout periods, times when transactions are prohibited. Bostic said he was also unaware when his holdings of U.S. Treasury funds in 2021 exceeded the limits in the committee’s trading and investing rules.
The U.S. Supreme Court on Tuesday declined to hear McKinsey & Co.'s bid to escape a lawsuit by retired turnaround specialist Jay Alix, who accused the management consulting firm of concealing potential conflicts when seeking permission from bankruptcy courts to perform lucrative work on corporate restructurings, Reuters reported. The justices turned away McKinsey's request that they overturn a lower court's decision that the lawsuit by Alix, who says the firm ran a "criminal enterprise" by hiding its ties to lenders and its clients' competitors. Alix's lawsuit accused McKinsey and several current or former employees of violating the Racketeer Influenced and Corrupt Organizations Act (RICO), a U.S. law used to target illegal conspiracies that originally was designed to target organized crime. Alix, who has battled McKinsey in multiple courtrooms since 2016, sought triple damages under RICO, which lets people sue if they believe criminal enterprises caused them harm. U.S. District Judge Jesse Furman in Manhattan in 2019 dismissed the lawsuit, saying that Alix did not assert a "proximate" link between McKinsey's alleged wrongdoing and harm to AlixPartners. Alix reported owning a 35% equity stake in AlixPartners. The U.S. Court of Appeals for the Second Circuit in January revived the case, saying that Judge Furman gave "insufficient consideration" to whether McKinsey undermined the integrity of federal judicial proceedings. "If McKinsey's conduct has corrupted the process of engaging bankruptcy advisors, as Alix plausibly alleges, then the unsuccessful participants in that process are directly harmed," Second Circuit Judge Barrington Parker wrote. McKinsey in its petition to the Supreme Court argued that the Second Circuit's decision ran contrary to past rulings by the high court holding that RICO lawsuits may be brought only by plaintiffs injured "directly" by wrongdoing.
