Monday, July 16, 2007

Judge drops charges against 13 in KPMG tax-shelter case

A federal district court judge today dropped all charges against 13 former KPMG executives in the largest criminal tax-shelter fraud case ever.

Judge Lewis A. Kaplan wrote that he had to dismiss the charges because prosecutors had violated the defendants' constitutional rights when they pressured the accounting firm KPMG to quit paying their legal fees.

He said the charges against three other KPMG defendants would stand because they hadn't shown that KPMG would have paid their defense costs if the government hadn't interfered in the matter.

In 2005, the government accused 17 former KPMG executives and two others of selling illegal tax shelters, depriving the U.S. Treasury of at least $2 billion in revenue. One executive pleaded guilty and is cooperating with the government.

Charges against KPMG were dismissed in January after it paid a $456 million fine.

For more information, see the New York Times story.