Friday, October 12, 2007
KPMG Trial, Pared in Scope, Nears After Stormy Prologue, by Paul Davies & Chad Bray:
It was once billed as the biggest tax-fraud case in U.S. history. Then a federal judge devastated prosecutors by dismissing charges against 13 out of 19 targets. But as the landmark case against former executives of accounting giant KPMG heads for trial Oct. 23, more than two years after the initial indictments, the stakes are still high for the government's broad fight against abusive tax shelters.
Three former lower-level KPMG executives and an attorney are all that remain of a case that once included the accounting firm's former vice chairman, Jeffrey Stein. A federal judge dismissed the charges against 13 individuals in July after finding that federal prosecutors violated their constitutional rights by pressuring KPMG to cut off their legal fees. Two others have pleaded guilty. Though the case has been whittled down, the outcome will be closely watched in legal circles, executive suites and accounting offices. A victory for the government could bolster its broad probe into abusive tax shelters. An acquittal may cause the government to re-think its strategy in future tax-shelter cases.
Update: Wall Street Journal Law Blog: Pre-Gaming the KPMG Trial, by Peter Lattman