Monday, March 27, 2006

First Former KPMG Tax Partner Pleads Guilty

Bloomberg reports (here) that former KPMG tax partner David Rivkin entered a guilty plea to conspiracy and tax evasion charges, the first individual from the firm to admit to criminal conduct.  The government has indicted 19 individuals, most from KPMG, for selling tax shelters to wealthy individuals.  At the plea hearing before U.S. District Judge Lewis Kaplan, Rivkin stated that he signed opinion letters regarding the propriety of the tax shelter transactions "knowing them to be false, in order to mislead the IRS."  Rivkin agreed to cooperate in the government's prosecution, and as the first defendant to break ranks -- or cave in to government pressure, depending on your point of view -- he may be a harbinger of more plea agreements.  The government's prosecution focuses more on conduct misleading the IRS about the nature of the tax shelters and less on a technical determination of their propriety, so cooperating witnesses will be key to the case.  (ph)


UPDATE:  The superseding criminal information filed in connection with Rivkin's guilty plea is below.  The tax evasion count is based on his work for nine KPMG clients in 2000 and 2001, and the "approx. amount of fraudulent tax shelter loss" is $235 million. (ph)

Download kpmg_rivkin_superseding_information.pdf

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Since KPMG admitted its part in a conspiracy with multiple parties to commit fraud, wouldn't RICO be enforceable against them as the Feds threatened against Drexel? If not by the Feds, Could not a civil actions for treble damages be brought by any person harmed?

Posted by: Anon | Mar 29, 2006 4:00:24 PM

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