Monday, September 26, 2005

Working While Under Indictment

How do you support yourself when the government has charged you with a crime?  That can be a significant issue for defendants in white collar cases who do not have employment agreements with companies that provide for payment of attorney's fees and maybe even permit the executive to be on paid leave while the charges are pending.   The Department of Justice takes a dim view of such arrangements in its Thompson Memo, and for those defendants with no safety net, the need to continue working to pay for the legal defense is paramount.  A short item in the New York Times (here) notes that R.J. Ruble, the only non-KPMG partner indicted for sales of abusive tax shelters by the firm (he is alleged to have provided the legal opinions supporting the sales -- indictment here), has a tax consulting business.  His website,, is a fairly bare-bones affair, with some short tax notes he has written and a little bit of his background.  The "Background" page states that Ruble has 30 years experience in tax matters, and that he is "a federal income tax generalist; if there can be such a thing in this day and age."  No mention is made of any specific law firm experience or types of transactions on which he worked.

It is an interesting question whether Ruble should reveal his current situation on the website, which is a means of attracting clients, although such sites are usually not all that successful in that regard.  Like any advertising material, so long as it is not false and meets the other requirements of the ethical rules, I don't think he would have to disclose that he has been charged with a crime -- that whole presumption of innocence thing.  If a client hires him as an attorney, then I think he would have a fiduciary and professional responsibility to explain his current situation, and perhaps that he was terminated from his law firm (Sidley, Austin) for his involvement in tax shelters.  A client has a right to know that the attorney may lose his license to practice law if a criminal conviction results from the charges, at least for a period of time and perhaps permanently.  That disclosure may have the effect of driving away potential clients, and the publicity from the indictment could have made it impossible for Ruble to serve as a tax adviser because clients fear his name will attract the attention of the IRS, a prospect few wish to court.  Regardless of the outcome of the KPMG-related tax cases, it has likely ended the careers of all the individuals charged as tax practitioners. (ph)

Legal Ethics, Prosecutions, Tax | Permalink

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