A Houston federal judge on Wednesday ordered two years of federal prison for Jack Stephen Pursley, a Houston lawyer who was convicted last fall of federal tax evasion.
U.S. District Judge Lynn N. Hughes also ordered Pursley to pay the federal government $1.8 million in restitution, $100,000 in fines and a $400 special assessment. The judge ordered two years of supervised release once Pursley is outside prison walls.
The court has set a hearing for Oct. 29 to determine a payment schedule for the restitution.
Pursley stood trial for four days last September in Judge Hughes’ courtroom before a jury of nine men and three women found him guilty of three counts of tax evasion and one count of conspiracy to defraud the United States.
A grand jury indicted Pursley in September 2018. In the indictment and at trial, the government alleged Pursley helped a client and college friend, Shaun Mooney, transfer $18 million in offshore funds from the Isle of Man to shell companies in the U.S. by disguising the transfers as stock purchases. For his help in the elaborate scheme, the government said, Pursley received $4.8 million and received an interest in the client’s ongoing business – income never reported to the IRS.
Judge Hughes’ sentencing was far lighter than the 12 to 15 years of jail time the federal government had asked for. In court documents, the government said Pursley deserved a much harsher sentence because, despite the defense’s attempts to persuade the jury of his innocence and naïveté of the depth of the scheme, Pursley knew exactly what he was doing.
“To cloak the fraud and give it a veneer of legitimacy, Pursley took extensive steps,” the government’s July 13 sentencing memorandum says. “He used his status and knowledge as an attorney to mislead accountants, attorneys and a compliance officer. He further caused to be created six nominee companies, and paper transactions with reams of fraudulent records, including promissory notes, private placement memoranda and tax returns.
“His decision to commit these crimes and his meticulous efforts to carry out the fraud were not impulsive or the result of desperation, necessity or financial hardship,” the memorandum continues. “They were the calculated decisions of a professional, who believed that he was above the law.”
The case was prosecuted by Sean Beaty, Grace Albinson, Jack Morgan and Nanette Davis, who are all based in Washington, D.C. in the Department of Justice’s tax division.
At trial, Pursley was represented by Dallas attorneys Victor Vital of Barnes & Thornburg and Nicole LeBoeuf of LeBoeuf Law, but after his conviction, he brought Houston criminal defense lawyer Chip Lewis on board to spearhead the post-trial proceedings.
The case boiled down to whether Pursley knew the true ownership of Southeastern Shipping, Mooney’s offshore rig recruiting business and the original source of the repatriated revenues.
While it came out at trial that Mooney had been the owner all along, Pursley’s lawyers argued that Mooney lied to his friend. The defense also had argued that Pursley only stood trial because Mooney had turned on him — falsely implicating him after a civil dispute between the two exposed his own tax evasion scheme.
But the government argued that it was Pursley’s recent actions in the civil dispute that warranted a 12 to 15-year sentence.
“Since his conviction, Pursley has waged a scorched-earth campaign against the government’s trial witnesses: demanding depositions in his civil lawsuit with Shaun Mooney of witnesses he testified against him at trial,” the government says in its sentencing memorandum.
Witnesses who testified for the government at trial brought an intriguing international flare to the Houston courtroom. There was Eduard Venerabile, a Brazilian oil rig safety advisor and longtime friend of Mooney’s who was the purported owner of Southeastern Shipping. There was Kerry Smith, a compliance officer in the Isle of Man who testified by video deposition about how she questioned whether Venerabile was the true owner — and whether he even existed — after being unable to reach him on multiple occasions.
The government’s star witness was Mooney, who brazenly admitted on the witness stand that he had cheated on his taxes for decades.
“I didn’t wanna pay my taxes,” he told the jury.
The Texas Lawbook attended the whole trial. For previous courtroom coverage, click here.