White collar injustice

The long-running KPMG tax-shelter case ends with a whimper

What started as the "largest criminal tax-fraud case in history" ended this week with a whimper -- one acquittal and three partial convictions for four defendants in the long-running KPMG tax-shelter case. The Justice Department had charged 19 people back in 2005. Two pleaded guilty, while 13 had their charges dismissed after federal Judge Lewis Kaplan found the government had violated their Fifth and Sixth Amendment rights by coercing KPMG into denying them legal assistance, among other offenses.

The remaining four stood trial this fall. David Greenberg, who was jailed for five months after the government argued he was a flight risk if permitted to post bail, was acquitted on all counts. The other three were convicted on some tax evasion charges while acquitted on others. No one was convicted on the original, underlying conspiracy charge.

Justice may consider this as a partial vindication, and it is certainly a setback for the three defendants who now face possible jail time on the tax evasion charges. But the fact that the government could not prove its case for a criminal conspiracy calls into question the premise of the entire prosecution. We argued from the beginning that prosecuting tax advisers for selling tax shelters that had never been found illegal in a court of law had an Alice-in-Wonderland quality. This aggressive legal theory produced, in turn, the government misconduct that ultimately led to the dismissals. Now a jury has found that the conspiracy alleged by the government never existed.

Without a conspiracy, even the convictions the government did secure look dubious and could be overturned on appeal. Whether those convictions stand up or not, there are at least 14 innocent people whose lives were turned upside down and careers ruined by overreaching prosecutors. No moral victory can give back what was taken from them by this regrettable, and abusive, episode.

Original report here



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