Monday, April 24, 2006

The Prosecution Side in the KPMG Defendants' Case

The government response to Judge Lewis Kaplan's Order in the KPMG Defendants' case is a nine (9) page letter. (see New York Times here)The Government was asked to provide a Bill of Particulars, specifically answering "[w]ith respect to each of the tax shelters as to which the government intends to offer proof, does the government allege that the tax shelter was fraudulent as designed and approved by KPMG and, if so, in what respects?"

The response speaks to the shelters, but also generally states:

"The Government alleges that these opinion letters do not reflect the transactions ‘as designed,’ but instead contain misleading information, false statements, and material omissions designed to disguise the transaction and mislead the IRS. Moreover, the Government alleges that the conspirators drafted these opinion letter so that they misrepresented not only the facts of the transaction, but also conspirators’ conclusions regarding the application of the law to the facts. Thus, while the opinions state that certain tax treatments of certain facts (falsely) described in the opinion letter are more likely than not to survive IRS challenge, the Government alleges that conspirators did not, in truth, believe that to be so."

One has to wonder if any of the government material was at one point attorney-client material. What did the company provide to the government? Did any of this material serve as the basis for the government response?

(esp)

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