I can’t wait for Hollywood to see the potential in this KPMG tax shelters mess. I predict movie gold!
There’s nothing 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 tax payers to declare manufactured paper losses to offset real capital gains. hey 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 on 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. The dismissed juror was replaced by an alternate. The trial resumes today.
{ 2 comments }
