Lawyer Charged With Tax Fraud

David Eagan acknowledged 2010 mistake, but said it has been rectified
David Eagan, photographed last March near his property in Wainscott T.E. McMorrow

     David E. Eagan, an East Hampton attorney and the president of the Wainscott School Board, was arraigned on Feb. 28 on a charge of criminal tax fraud in East Hampton Town Justice Court. A state auditor said he failed to file New York State income tax returns in 2010.

     Mr. Eagan is a senior partner in the firm Eagan and Matthews, which represents the East Hampton Town Trustees and has represented East Hampton Town in a number of lawsuits. He entered a denial to the class E felony, which carries a maximum sentence of up to four years in prison, and Justice Steven Tekulsky released him on his own recognizance.

     Reached Thursday, Mr. Eagan acknowledged not filing his taxes, but said it was a mistake that he had already rectified. "This is a private matter. It has nothing to do with my clients or my firm," or the school board, he said.

     "Mr. Eagan is a prominent local lawyer with an impeccable reputation," his attorney, Anthony M. LaPinta, said on Friday. "We will resolve these charges fairly and expeditiously.

     According to his firm’s website, Martindale Hubbell, often called the lawyer’s bible, has awarded him its highest rating for legal competency and professional reliability every year since 1997.

     Although Mr. Eagan declined to discuss specifics, court documents allege that he failed to report $310,000 in earnings to the New York State Department of Taxation and Finance, which resulted in a tax liability totaling $17,620, after allowances and deductions were credited in an audit.

     "I've paid it all back — the penalties too. This is just cleanup," Mr. Eagan said. Asked why he was arrested, he said, "It's so out of proportion. . . . It sounds much more than it is."

     Bibi Hoosein, the state tax auditor and a licensed certified public accountant, gave a sworn statement to Detective Investigator Joseph Miceli of the Suffolk County District Attorney’s office on Feb. 27 after analyzing tax documents.

     "Additionally, I noted that in other tax years, which range from 2002 to 2011, Eagan and McCaffrey failed to file New York State Income Tax refunds when taxable income was being earned," the auditor's statement said. "This additional activity is not being addressed in this statement. . . ."

     The auditor added that "without further business records, I am unable to conclude if Mary Ann McCaffrey would have personal income tax liability, especially when considering that her filing status for those years is unknown." Ms. McCaffrey is Mr. Eagan's wife.

     Suffolk County police arrested Mr. Eagan at his Sayre's Path house on the morning of Feb. 28. The District Attorney’s Economic Crimes Bureau tax unit handles such matters, according to Robert Clifford, a spokesman for the D.A.'s office. The State Department of Taxation and Finance did not immediately return calls seeking comment.

     Mr. Eagan represents the East Hampton Town Trustees in two lawsuits involving revetments, including the trustees’ claim to ownership of the beach in front of 11 West End Road, where Mollie Zweig is attempting to build a rock revetment that the trustees oppose. He has represented the town in several other suits, as well.

     Mr. Eagan, who has been practicing law since 1983, was a founding partner of MacLachlan and Eagan in 2005. After John MacLachlan left the area, he established Eagan and Matthews in the same Pantigo Road office. The firm's focus is on real estate, land use, zoning, environmental matters, trusts and estates, and equine matters. He and his wife run Kilmore Farm in Wainscott, a horse farm.

     Since 2006, he has served on the Wainscott School Board, and has been its president for the past year. In recent months, the school district was criticized after a state audit found a $2.4 million surplus, totaling 68 percent of its current budget and more than 17 times the amount allowed by law. An audit conducted by the office of the state comptroller revealed, in late December, that the district had consistently overestimated expenses and underestimated revenues dating back to 2007, during which time the property tax levy increased by $325,000.

     Mr. Eagan took issue with the state's findings, telling The Star that the district had a five-year plan to reduce both surplus and taxes. He called the state law limiting the amount of surplus to no more than 4 percent of a budget "arbitrary," and said it did not work for a small district such as Wainscott, whose school runs only from kindergarten through third grade.

     Before coming to East Hampton, Mr. Eagan practiced in Manhattan for 22 years. According to his firm’s website, he was a partner at Fulbright and Jaworski and at Battle Fowler.

     Mr. Eagan is due back in Justice Court on April 10.