An appeals court in the US has told the judge presiding over KPMG's tax shelter case that he has the right to toss the case out of court if he believes federal prosecutors violated the rights of its former employees.
Judge Lewis Kaplan has spoken out against prosecutors who may have gone too far in pressuring the firm to stop paying the legal fees of 17 former employees facing conspiracy and tax evasion charges over the sale of questionable tax shelters
However, the Court of Appeals also said the judge was wrong in encouraging some of the indicted staff to file civil breach of contract claims against the firm, to force it to pay their legal expenses.
The tax shelter fraud case which helped wealthy individuals avoid about US$2.5b in taxes, has been put on hold because of the dispute over legal fees.
KPMG avoided criminal prosecution last year when it agreed to cooperate with government investigators and pay a fine of $456m.
Further reading:
Appeals Court Unimpressed By KPMG Fee Fight
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