I can’t wait for Hollywood to see the potential in this KPMG tax shelter mess. I predict movie gold!
Nothing is waiting in the wings yet (so far as I know), but the live coverage is just as good. After declaring the KPMG lead tax evasion scandal as the “largest tax fraud ever,” overzealous prosecutors outmaneuvered themselves into having many of the charges dropped.
Four defendants remain for the current set of charges. They are former KPMG partner David Greenberg, investment consultants Robert Pfaff and John Larson, and Raymond J. Ruble, a former partner at Brown & Wood, now Sidley Austin. The four are charged with marketing a scheme that allowed wealthy taxpayers to declare manufactured paper losses to offset real capital gains. They relied on “hundreds of opinion letters” from Ruble, who also helped Larson and KPMG design the shelters. Ruble was paid $50,000 per opinion letter so each client would have the assurance they were protected if the IRS ever questioned the legality of the shelters.
Prosecutor John Hillebrecht claims that while the Tax Code is complicated, the rules are simple:
Ladies and gentlemen, you can’t lie to get out of paying taxes.
The feds charge that Larson and Pfaff created a company to market their scheme. Clients relied on “opinion letters” written by Ruble, which were supposed to protect clients from the IRS. Ruble was reportedly paid $50,000 per opinion letter, plus hundreds of thousands of dollars from Larson and Pfaff’s company.
The trial began yesterday, just as a sitting juror advised the judge that she could no longer continue. She claimed that she would “vote guilty from day one” after reading articles about the trial, despite earlier assurances to the contrary.
Federal Judge Lewis Kaplan, who is presiding over the trial, questioned the juror. She was dismissed from the trial and advised that the U.S. Attorney’s Office would investigate her for perjury or obstruction of justice.
Kaplan told the remaining jurors, “you don’t have to be a genius to duck jury duty if you really want to do it.” It’s vaguely reminiscent of that great line from one of my favorite TV shows, Designing Women:
Juries scare me. I don’t want to put my faith in 12 people who weren’t smart enough to get out of jury duty.
(Of course, this in no way implies that you should skip out on jury duty…)
The remaining jurors agreed that they were willing to serve and that they could be impartial. An alternate replaced the dismissed juror. The trial resumes today.
If those guys are smart, they’ll apply for their piece of the bail-out bucks to pay the penalties and the huge lawsuits likely to be filed by their clients….problem solved!!
How funny that Judge Kaplan made that comment about jury duty. I once incensed the county judge when I sent a letter requesting that one of my employees be excused from jury duty. Although I simply expected a simple yes or no, he exploded and called our attorney, the CEO, and several board members. Upon asking our attorney why the judge reacted that way, he explained that he has had a very difficult time conducting fair trials because those who may be able to generate enough brain power to move their legs usually find a way to be excused, leaving his court with…well……..uh, you know…
After sitting for jury duty (which I do think is the right thing to do), I remarked that it had accomplished one good thing: convinced me to remain on the straight and narrow. I would never want to be tried by a jury of my “peers.”