Judge Postpones KPMG Fraud Trial
The judge overseeing the KPMG tax-shelter fraud case -- which prosecutors have called the largest-ever U.S. criminal tax case -- Wednesday delayed the start of the trial by four months to give the 18 defendants more time to review documents produced by the government.
U.S. District Judge Lewis Kaplan in Manhattan moved the trial date to Jan. 15 from Sept. 11.
The judge accepted arguments by some defendants that the government had overburdened them with voluminous “waves” of documents, containing millions of pages, after an original Oct. 5, 2005, deadline.
“Quite apart from the question whether some of the government’s failures are culpable and deserving of sanctions, defendants justifiably argue that the extent of the belated production has been so large that they simply need more time to make sense out of it,” Kaplan wrote in a two-page order.
The judge said many documents delivered electronically, such as on hard drives, were difficult to locate or decipher. Others, he said, were delivered in paper form to a warehouse where conditions are “considerably less than satisfactory.”
Heather Tasker, a spokeswoman for U.S. Atty. Michael Garcia in New York, declined to comment.
Cristina Arguedas, an attorney for defendant Gregg Ritchie who had argued for a postponement, said of the ruling: “It’s totally appropriate and fair and much appreciated.”
The government is accusing 16 former partners of accounting firm KPMG and two other defendants of defrauding the Internal Revenue Service by setting up questionable tax shelters that created $11.2 billion of tax losses for hundreds of wealthy clients.
Kaplan had previously ruled that prosecutors had violated the former KPMG partners’ constitutional rights to a fair trial and assistance of counsel in pushing the firm to end its long practice of paying employees’ legal bills.
The judge allowed the partners to bring civil proceedings to get the fees, and last week he ordered them and KPMG to enter talks to resolve the fee matter.
KPMG agreed last August to pay $456 million, accept an outside monitor and admit to wrongdoing to end a federal probe into the tax shelters.
