Saturday, July 14, 2007
As discussed in an earlier post (here), U.S. District Judge Lewis Kaplan asked federal prosecutors for their opinion regarding how much it would cost to mount a reasonable defense to the charges in U.S. v. Stein, involving the KPMG tax shelters. While the U.S. Attorney's Office demurred on that request, a number of the defense lawyers chimed in with their estimate on the cost of defending a complex tax case involving 20 million documents, multiple defendants, and a trial likely to be measured in months rather than weeks. According to a New York Law Journal article (here), the amounts run from a low of $10 million all the way to $44 million -- each! Given that there are eighteen defendants involved in the case, even using a low-end estimate means an expenditure that dwarfs the annual budget of many small cities. A significant portion of the cost involves coordinating and searching through the mountain of documents in the case. While Stein may be unique in the high volume of records, in a corporate crime prosecution involving conduct over a couple years it would not be a surprise to find the universe was over a million documents of some possible relevance, and of course the devil is in the details of all those documents for mounting a defense.
The article also adds another cost estimate to the list in the earlier post of defense costs in white collar prosecutions. It notes that the defense for E. Kirk Shelton, former vice-chairman of Cendant Corp., was over $24 million. The old Ev Dirksen line is starting to come to mind. (ph)