Bail Set at $25 Million in Tax Shelter Case

A former KPMG partner jailed for five months while awaiting trial on charges he helped arrange illegal tax shelters can be freed after he and his family post $25-million bail, a judge ruled Wednesday.

U.S. District Judge Lewis Kaplan in New York granted bail to David Greenberg, one of 17 former KPMG executives charged with selling illegal tax shelters that generated billions of dollars in phony losses and cost the U.S. at least $2 billion in revenue.

Greenberg, his father, his brother, his children and his former wife must cosign the $25-million bond, Kaplan said, and the family will be “substantially ruined” if the defendant flees before his September trial. The judge essentially demanded that Greenberg disclose all his assets and partners as part of his bond.

“This is an individual who has schemed his entire life to make sure nobody gets at his assets,” Kaplan said after a hearing.

Kaplan’s ruling reverses his November decision to deny bail to Greenberg. In October, a federal magistrate in Los Angeles, where Greenberg was arrested, also denied him bail. Greenberg, who offered to post a $17-million bond, is the only defendant who has been held in jail pending trial.

KPMG agreed in August to pay $456 million to avoid prosecution over its sale of improper tax shelters.

At Wednesday’s hearing, defense attorney Richard Strassberg tried to convince Kaplan that Greenberg wasn’t hiding assets and wouldn’t flee the country. The judge expressed skepticism but said, “Bail is enshrined in the Constitution.” He said Greenberg would have to remain under home detention in New York if he was able to post bail.