December 24, 2008
NLJ: What We Can Learn the KPMG Tax Shelter Trial
Today's National Law Journal: A White-Collar Defender's Take on What Can be Learned from the KPMG Verdicts, by Pamela A. MacLean:
Douglas Whitney, a partner at McDermott Will & Emery, has represented national accounting companies and law firms accused of promotion of illegal tax shelters in Internal Revenue Service investigations and enforcement actions for six years. He litigates white-collar criminal defense cases from the firm's Chicago office. ...
NLJ: What has been learned from the KPMG prosecutions?
DW: It certainly has been an unusually long and tortured path from investigation to verdict. [The] verdict is a mixed one. All the defendants were acquitted on conspiracy, and Greenberg on tax evasion as well. The acquittals convey the idea that a criminal courtroom is not the appropriate place to define elusive contours of the economic substance doctrine. The economic substance doctrine is the long-recognized judicial doctrine that transactions be supported by economic substance and can't be motivated solely to generate a tax benefit. It has gotten a fair amount of attention in civil tax cases, about where to draw the line. I think the verdict suggests that reasonable minds can differ about where to draw the line, but that criminal court is no place to decide it.
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These cases were about fact fraud, not economic substance. The defendants elicited factual representations they knew or should have known were not true.
Posted by: Anon | Jan 2, 2009 8:26:18 PM