Eight Ex-KPMG Partners Are Indicted for Selling Tax Shelters <P>By Jonathan D. Glater THE NEW YORK TIMES <P>Eight Ex-KPMG Partners Are
Indicted for Selling Tax Shelters
By Jonathan D. Glater
THE NEW YORK TIMES
Eight former partners of KPMG, the accounting firm under investigation for its role in creating and selling questionable tax shelters, were named by federal prosecutors in an indictment unsealed Monday in federal court in Manhattan.
The indictment is the long-anticipated next step in prosecutors’ broadening investigation into shelters that from 1996 through 2002 helped wealthy investors evade billions of dollars in taxes. It is also strong evidence that the government is prepared to pursue the accountants, financial advisers, lawyers and bankers who had a hand in the transactions.
The indictment refers to unnamed foreign banks and other entities, which suggests that the government may file other criminal charges at some later date. While the banks are not identified, a 2003 report by a Senate subcommittee said that Deutsche Bank, UBS of Switzerland and HVB of Germany among others had roles in the questionable KPMG shelters. And earlier this month, a former executive in the New York office of HVB pleaded guilty to conspiracy to commit tax fraud and is presumably assisting prosecutors in their investigation.
The indictment, which names an outside lawyer along with the former partners, accuses the nine of conspiring to defraud the government by concocting “tax-shelter transactions and false and fraudulent factual scenarios to support them”; by preparing “false and fraudulent documents to deceive” the Internal Revenue Service; by preparing “false and fraudulent” tax returns that included the false tax losses; and taking steps to conceal the shelters from the IRS.
The former KPMG partners named in the indictment are: Jeffrey Stein, John T. Lanning, Richard Smith, Jeffrey Eischeid, Philip J. Wiesner, John Larson, Robert Pfaff, and Mark Watson. The lawyer is Raymond J. Ruble, a former partner at Sidley Austin Brown & Wood. The arraignment of the nine men is scheduled for Sept. 6 before Judge Lewis Kaplan of the U.S. District Court in Manhattan.
Nearly all the lawyers representing the defendants and who could be reached for comment Monday said their clients intended to fight the charges vigorously; some had not had a chance to read the indictment Monday afternoon and could not comment.
A spokesman for HVB and a spokeswoman for Deutsche Bank declined to comment on the investigation; a spokesman for UBS told Bloomberg News over the weekend that the bank was not under investigation in connection with the tax shelters.