Class Action

Equity Groups Allege KPMG Caused $50 Million Loss in Fake Tax Shelters

By classlawblog

According to Courthouse News Services, equity groups Camden Equity Holdings, Alpine Equity Holdings, Vintage Capital Group, and Fred C. Sands and two Sands Trusts have filed a lawsuit against, among other defendants, the accounting firm KPMG alleging KPMG sold the equity groups fraudulent tax shelters when KPMG knew the Internal Revenue Service would probably deny the deductions.

The equity group plaintiffs allege that KPMG convinced the plaintiffs to purchase the tax shelters in order to receive millions of dollars in fees.  As a result of the purchase, plaintiffs were purportedly left owing millions in taxes and interest. The plaintiffs also assert that KPMG persuaded them into selling FSR Brokerage, a business run by the plaintiffs, “in order to ‘benefit’ from a tax strategy KPMG and other defendants knew was a sham.” Plaintiffs allege KPMG benefitted from the rushed sale, since KPMG could charge an extra fee to include the plaintiffs in its “Redemption Note Transaction” tax shelter for 2000. Plaintiffs claim that waiting until 2001 to sell FSR Brokerage at its market value would have been more advantageous for plaintiffs. The plaintiffs seek more than $50 million and punitive damages. The plaintiffs state they filed the suit following the 2005 criminal proceeding against KPMG where KPMG admitted it created fraudulent tax shelters.

Full post as published by ClassLawBlog.com on September 09, 2008 (boomark / email).