Legal News

Breaking: Jury Convicts Two Ex-KPMGers, One Lawyer on Tax Charges

By Ashby Jones

This just in, thanks to Chad Bray at Dow Jones Newswires: The prosecutors on the KPMG case have risen from the ashes — at least risen up a little bit. Earlier today, they won convictions against two former KPMG executives and a former Sidley Austin lawyer on tax-evasion charges in a case once billed as the largest tax-shelter fraud case in U.S. history. Click here, here, here, here and here for earlier posts on the KPMG matter.

After a two-month trial, the jury of nine women and three men found ex-KPMG tax partner Robert Pfaff, ex-KPMG senior tax manager John Larson and ex-Sidley & Austin lawyer Raymond J. Ruble guilty on multiple counts of tax evasion. They were each acquitted of conspiracy and one count of tax evasion. Ruble also was found not guilty on two counts of tax evasion.

Former KPMG tax partner David Greenberg was acquitted on the five counts of tax evasion he faced. A conspiracy charge was dismissed against Greenberg earlier this month. “It’s bittersweet, because my client went through a lot,” said Greenberg’s lawyer, David Pitofsky. “But for today, we’re thrilled.”

The convictions came after years of legal wranglings and a huge setback for the government last year in the closely watched case. Last year, U.S. District Judge Lewis Kaplan in Manhattan dismissed 13 former KPMG executives from the case after finding prosecutors violated their rights to counsel by putting undue pressure on the accounting firm not to advance them defense costs.

Prosecutors had alleged the one-time KPMG executives and Ruble engaged in a scheme to help some of the nation’s wealthiest individuals avoid paying hundreds of millions of dollars in taxes through fraudulent tax shelters. Six people have pleaded guilty to criminal charges in the matter.

A conspiracy charge was dropped against KPMG itself in December 2006 after the firm fulfilled terms of its 2005 deferred-prosecution agreement with the government, in which KPMG agreed to pay $456 million and admitted to fraudulent conduct in the design and marketing of certain tax shelters.

Full post as published by Law Blog - WSJ.com on December 17, 2008 (boomark / email).