The massive tax shelter schemes orchestrated by four ex-partners at the accounting firm of Ernst & Young continue to make news, long after their convictions. In fact, one of the questions that I see most at “ask the taxgirl” is whether I’ve heard any news about those who were convicted last May. My answer, some of you will be pleased to know, is now yes. Last week, sentences were handed out for four of the partners involved a series of tax shelter schemes found to be illegal.

Richard Shapiro and Brian Vaughn were sentenced last Friday. Shapiro received a prison term of two years and four months. Vaughn will do a little less, with a year and eight month sentence.

The day before the sentencing of Shapiro and Vaughn, another defendant, Robert Coplan, was fined $75,000 and sentenced to three years in prison. A fourth defendant, Martin Nissenbaum, was sentenced to two and half years in prison and a $100,000 fine. Both men were also ordered to perform 120 hours of community service annually for three years. At least half of that service is to counsel tax professionals about their experiences – you know, what not to do.

None of the defendants remains employed by Ernst & Young – no surprise there. The company has distanced itself from the four, though the judge noted that they likely didn’t act alone. “I understand there was pressure coming from higher-ups at Ernst & Young,” U.S. District Judge Sidney Stein told Coplan. In the end, though, it was not an excuse for the behavior which is estimated to have cost taxpayers billions of dollars.

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Kelly Erb is a tax attorney and tax writer.


  1. Unfortunately, I know one of the defendants, had invited him to speak at events and was a member of several planned giving boards at previous jobs.

    The point I want to add was the use of the so-called “tax opinion” letters written by law firms. Drives me nuts when promoters of questionable schemes pull out those letters. It could be from the biggest law firm in the world, but it is still worthless – unless it’s a private letter ruling from the IRS.

  2. Reply

    I agree with the above post. Always wondered why the law firm was never indicted. Seems like without their participation none of this would have gotten off the ground. Without the opinion letter would anyone have even invested in any of these transactions?

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