KPMG tax shelter judge ‘can throw case out of court’

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

Former KPMG accountant pleads guilty

Criminal charges dropped against KPMG

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