The judge presiding over the US KPMG tax shelter case has disqualified the lawyer of one of the defendants, over a conflict of interest issue.
Federal judge Lewis Kaplan disqualified Steven Bauer – representing former KPMG partner John Larson – because the lawyer previously represented a colleague of Larson's in the same case.
Bauer provided legal advice to another defendant in the case, David Makov – an adviser working outside of KPMG – who last month pleaded guilty and agreed to cooperate with prosecutors, the New York Times reported.
Makov's testimony is also expected to strengthen the prosecution's case against Larson, one of 19 people charged in 2005 with fraud, tax evasion and conspiracy involving the creation and sale of tax shelters, which tax officials say amounted to non payment of about $2.5bn in tax.
In July, Kaplan dismissed charges against 13 defendants, ruling that their constitutional rights were violated by prosecutors who pressured KPMG into cutting off payments for their legal fees. The prosecution is now appealing the ruling.
Further reading:
Judge kicks outs case against 13 ex-KPMG executives
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