Wednesday, October 15, 2008

Trial set to Begin in NY Tax Shelter Case


It was a prosecution once touted as the biggest tax fraud case in history. Now four remaining KPMG defendants are going on trial, accused of conspiring to help at least 600 wealthy people evade more than a billion dollars in taxes.

There were once 19 defendants, most of them former partners at the accounting giant. Two cut deals with prosecutors. Charges against the rest were dismissed after U.S. District Judge Lewis A. Kaplan concluded that prosecutors had unfairly pressured KPMG to break promises to pay employee legal expenses.

The three former KPMG executives and a lawyer who remain in the case are charged with conspiring to obstruct the Internal Revenue Service, evading taxes and filing false tax returns. The trial, with jury selection on Tuesday, is scheduled to last four months or longer.

Prosecutors say the men conspired to market complex tax shelters from 1997 until 2000 to wealthy individuals who wanted to dodge taxes.

In court papers, lawyers said the defendants acted legally and that any questionable tax shelters were challenged by the IRS and appropriate taxes were paid.

The defense said the government was seeking "to poison the jury with allegations of tax evasion far beyond anything it can or will even try to prove."

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