David Jetuah, Accountancy Age, Tuesday 31 August 2010 at 09:38:00

Convictions of two former KPMG accountants for promoting tax shelters upheldin the United States


Federal judges in the United States have upheld the convictions of two formerKPMG accountants and a lawyer on tax shelter issues.

However, judges threw out a $6m (3.9m) fine against one of the defendants.

In December 2008, a New York jury convicted former US KPMG tax partner RobertPfaff and former US KPMG senior tax manager John Larson on 12 counts each of taxevasion.

Prosecutors said the men represented a tax shelter known as BLIPS as a wayfor clients who earned more than $20m (13m) to eliminate capital gains orregular income for tax purposes.

The jury also found law firm Sidley Austin LLP partner Raymond Ruble on tencounts of tax evasion.

Larson was sentenced to ten years in prison and fined $6m (3.9m). Pfaffreceived an eight-year sentence and was fined $3m (1.9m), while Ruble washanded a six-year prison term.

But the appeals court ruled Larson's fine was too high, citing a lack of juryfindings to support a fine above $3m,Reutersreported.

Further reading:

Trialdate set for Italy?s most serious tax fraud case