Judge kicks outs case against 13 ex-KPMG executives
Latest twist in US tax shelters action sees charges dropped after defendants’ rights violated
A federal judge yesterday dismissed charges against 13 former executives of
KPMG in the US.
The executives had been accused of orchestrating a tax-shelter scheme that
defrauded the US Government of more than $2 billion (£980 million).
However, the cases against Robert Pfaff, John Larson and David Greenberg,
three former KPMG tax executives, as well as two defendants who never worked for
the firm, will proceed.
Judge Lewis Kaplan’s ruling was tied to his decision last year that
prosecutors had violated the defendants’ constitutional rights to counsel and a
fair trial by threatening to indict KPMG if it refused to cut off their legal
fees.
KPMG avoided the indictment after it agreed to pay a $456 million fine in
April 2005.
‘[The Justice Department] foreclosed these defendants from presenting the
defences they wished to present and, in some cases, even deprived them of
counsel of their choice. This is intolerable in a society that holds itself out
to the world as a paragon of justice,’ the judge said in a 64-page opinion.
‘The court has reached this conclusion only after pursuing every alternative
short of dismissal and only with the greatest reluctance,’ he continued, before
adding that the responsibility for the move ‘lies with the Government’.