16 Plead Not Guilty in KPMG Tax Shelter Case

Appearing in federal court Monday, 15 former KPMG executives and an outside attorney pleaded not guilty to fraud charges in connection with the sale of tax shelters to the wealthy.

Eight former KPMG executives and the lawyer were indicted in August and pleaded not guilty Sept. 6.

All appeared in U.S. District Court in New York again Monday to enter not-guilty pleas to a revised indictment released last week.

Also appearing were seven of the 10 new defendants named in the revised indictment, including Gregg Ritchie, a former partner in KPMG’s Woodland Hills office who now works for Beverly Hills-based investor Gary Winnick.

Winnick, the founder of Global Crossing Ltd., was not identified by name in the indictment but was referred to as a “Beverly Hills businessman” who participated in the shelters. He was not charged with any wrongdoing.

Not present in court for the arraignment was former KPMG tax partner David Greenberg. A federal judge in Los Angeles ordered Greenberg held without bail last week after prosecutors said he was a flight risk and had urged a government witness to lie to prosecutors.

Assistant U.S. Atty. Justin Weddle said it would take about three months to try the government’s case.

“There are a lot of discussions in e-mail that will constitute the bulk of the evidence,” he said.

KPMG agreed in August to pay $456 million to avoid prosecution over its sale of tax shelters. The firm, which earned about $115 million in fees from the shelters, said they generated at least $11.2 billion in phony losses.

KPMG also has agreed to submit to oversight by an independent monitor for three years.