Two former KPMG LLP executives were convicted and one was acquitted of federal charges that they sold illegal shelters that helped wealthy clients evade hundreds of millions of dollars in taxes.
A New York federal jury returned the verdict Wed nesday after a two-month trial. Convicted of tax evasion were Robert Pfaff, a partner, and John Larson, a senior manager, along with lawyer Raymond Ruble, who was once a partner at Brown & Wood.
Tax partner David Greenberg was acquitted.
The U.S. initially accused 17 ex-KPMG executives and two others of selling shelters that cost the Treasury $2 billion in 2005.
Charges against KPMG, one of the big four U.S. accounting firms, were dismissed in January 2007 after it paid a $456 million fine. Executives created investments which, while carrying no real risk, generated paper losses that clients could use to offset income and reduce taxes, Assistant U.S. Attorney John Hille brecht told jurors at the start of the trial Oct. 15.
Larson and Pfaff left KPMG in 1997 to create Presidio Advisory Services, a “tax-shelter mill” that sold hundreds of shelters to wealthy clients, he said.
Presidio registered as a Denver business but listed a principal operating address in San Francisco.
They worked with Greenberg, a KPMG partner, and Ruble, who wrote letters vouching for the shelters’ legitimacy, he said.
