Law360: How They Won It

Kramer Levin's huge win for client R. Craig Brubaker was examined in a June 15, 2011 Law 360 article entitled "How They Won It: Kramer Levin Naftalis & Frankel LLP." As the article noted, although "the odds were against" our client, Litigation partners Barry H. Berke and Paul S. Schoeman successfully convinced a jury that their client acted in good faith in connection with a charged tax shelter scheme that generated billions of dollars in tax losses. Mr. Brubaker, a former banker with Deutsche Bank, who was tried along with four other defendants, was accused of designing and marketing the tax shelters and of benefiting by way of big commissions. As the article noted, there was a great risk that Mr. Brubaker's story would get lost amidst a ten-week trial and five other sets of defense counsel. But instead, Mr. Brubaker was the only defendant acquitted of all the changes.

The article noted that Mr. Berke and Mr. Schoeman were able to turn the jury in their favor using "wily and forceful cross-examinations that pulled helpful information out of government witnesses who could have otherwise damaged their case." Mr. Berke said that they "...opened big and closed big. We were very clearly articulating a theory of innocence." Mr. Schoeman said their plan was to not just "...fade into the woodwork, but that when we cross-examined witnesses and presented our side of the case, we were going to have something big to say."

They used a variety of techniques to position Mr. Brubaker as having had no reason to believe that the tax shelters were illegal. One technique focused on one of the government's biggest witnesses, Erwin Mayer, a former tax partner at Jenkens & Gilchrist who was also Mr. Brubaker's contact on the tax strategies and who pled guilty in 2010 for his role in the scheme. Mr. Schoeman said that, based on Mr. Mayer's success in having sold the tax shelters to wealthy, sophisticated investors, they sensed that if they could get him back to his sales pitch on the stand, it would show just how convincing he had been that the shelters were legal. At the outset of four days of cross-examination, Mr. Berke engaged in a role-playing exercise with Mr. Mayer. The article reported that Mr. Berke used a red handkerchief as a prop during his cross-examination of Mayer to illustrate certain points and set himself apart from other counsel. Mr. Berke "asked Mayer to role play, to reenact his tax shelter pitches from a decade past. With his red handkerchief in his breast pocket, Berke impersonated a wealthy investor client. But if Mayer slipped from the role, Berke removed the handkerchief and cross-examined him again as an attorney. Whenever he did this, he'd note out loud in court that he was taking out his handkerchief to talk to Mayer as a lawyer. 'Finally when [Mayer] did get in the role, he was articulate, he was passionate, he was intelligent,' Berke said." The exercise made great inroads in showing that Mr. Brubaker had many reasons to believe the tax shelters were legal.

Mr. Berke used his opening statement to make known that Mr. Brubaker, "a guy in the Dallas branch of this huge financial firm" even went to the head of the branch and asked if the sale of tax shelters was OK, "...and they approved it." He went on to promise the jury that "You'll have no question about Mr. Brubaker's good faith that what he was doing in connection with these tax strategies was entirely proper."

They also tried to "humanize" the taxpayer witnesses the government called to testify about aspects of the transactions. One such witness that Mr. Schoeman cross-examined was an 87-year-old WWII fighter pilot. Their strategy, Mr. Schoeman said, was to present him "...as the kind of customer that Craig Brubaker would be honored to have."

Mr. Schoeman picked up the defense for all the defendants when he was selected to cross-examine the prosecution's star witness, David DeRosa, an economics expert. Mr. Berke said Mr. Schoeman delivered a "spectacular" and "devastating" cross-examination. His line of questioning consisted of picking apart Mr. DeRosa's testimony, which included a Nobel Prize winning economics equation to determine the value of derivatives, something that Mr. Schoeman argued was unreasonable to expect Mr. Brubaker to use when Mr. DeRosa himself had noted that "such models where to be used, but not believed." Mr. Schoeman said, "It was colorful, because I don't think he saw it coming." He also zeroed in on Mr. DeRosa's remark that he "worked out of a wing of his house." Said Mr. Schoeman, "That was just a feeling that here was a guy who had boasted a little too much, and the jury would be happy to see him taken down a notch."