Judge Denies Separate Trials in Tax Fraud Case

A federal judge declined Tuesday to grant separate trials for 18 people charged in a tax shelter scheme for the rich that the government has called the largest criminal tax fraud case in history.

U.S. District Judge Lewis A. Kaplan said much of the evidence supporting the 46-count indictment that charges the defendants with conspiring to defraud the Internal Revenue Service would be used against all of the defendants.

“Separate trials would not result in significant time savings for defendants or jurors and would increase radically the burden on the court and the prosecution,” he wrote. “The interest of the public in consistent outcomes also supports a joint trial.”

Prosecutors have said the trial should last three months.

The defendants include 16 financial professionals or attorneys who were formerly employed by or affiliated with accounting firm KPMG. The government alleges the defendants helped affluent KPMG clients escape $2.5 billion in taxes.

KPMG already has admitted to helping wealthy clients evade billions of dollars in capital-gains and income taxes by developing and marketing the tax shelters and concealing them from the IRS. It has paid a $456-million fine, including $128 million in forfeited fees from sales of the shelters.

In a separate written ruling, Kaplan also rejected a defense argument that the indictment should be dismissed because the government had pressured KPMG-affiliated witnesses to “sing out of the government’s hymn book, regardless of the facts and their personal beliefs.”