Court Squashes One of Biggest Tax Fraud Cases in History


The AP reports that a judge has dropped charges against 13 former KPMG employees in what had been one of the largest criminal tax cases in U.S. history.

U.S. District Judge Lewis A. Kaplan said the dismissal was necessary because the government coerced KPMG to limit and then cut off its payment of the onetime employees’ legal fees….

The case resulted after the government investigated what it described as a tax shelter fraud that helped the wealthy escape $2.5 billion in U.S. taxes.

Kaplan said the Department of Justice “deliberately or callously” prevented many of the defendants from getting funds for their defense, blocking them from hiring the lawyers of their choice.

A spokeswoman for federal prosecutors, Yusill Scribner, told the AP the government “had no comment.”

A lawyer reader comments that the DOJ botched the case by overreaching in trying to an unusual degree to deny the defendants the ability to pay their lawyers. “This is a tactic the Justice Department started using under Ashcroft in white collar cases. It has been roundly criticized by civil libertarians, unions, defense counsel and many, many, federal judges. The policy was announced in the infamous Thompson memo, named after the Assistant Attorney General for the Criminal Division who issued it. It was so controversial that Justice recently announced it was withdrawing the memo. Too late for the largest criminal tax fraud case in history.

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