Tax shelter charges may be thrown out of court

Prosecutors in the US have admitted that dismissing chargers against former
partners of KPMG – involved in an illegal tax shelter scheme – may be the only
way to deal with violations of their constitutional rights.

In a documents filed to a US court on Friday, prosecutors of the US
Attorney’s office in Manhattan said that dismissal of the charges against at
least four former partners of the accounting firm and two other defendants would
not be appropriate.

This comes after US District Judge, Lewis Kaplan, ruled last year that the
government had unconstitutionally pressured the firm into an arrangement that
saw the defendants’ rights to a fair trial and assistance of counsel violated,

In response to alelgations that KPMG’s former partners helped cheat
government of $2.5bn in taxes, through the use of tax shelters, the firm came to
a $456m settlement agreement to avoid being indicted, and also withheld payment
of legal fees of the former partners.

The former partners filed documents asking for the charges to be dismissed,
with which prosecutors now agree.

‘Based on the government’s analysis of the court’s prior ruling and on
extensive legal research, we have concluded that the defendants are correct in
their assertion,’ the prosecutors wrote.

Prosecutors, however, asked the court to not dismiss charges against former
KPMG partners , John Larson, Robert Pfaff and Gregg Ritchie, who had at least
significant portions of their legal fees paid by entities other than KPMG.

A fourth partner, David Greenberg, had a termination agreement with the firm,
in which he waived rights for future legal costs from KPMG.

Further reading:

Former KPMG partners want case dismissed

Memo reveals KPMG feared total US collapse

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