An investigation into fraudulent tax shelters sold by accounting firm KPMG to wealthy US clients can be expected to result in more people getting charged with offences, according to the prosecutor who has led the probe.
David Kelley, who yesterday stepped down as US attorney for the southern district of New York, told the Financial Times: "We expect more individuals to be charged. It is a ongoing investigation."
The investigation into KPMG's sales of tax shelters to wealthy individuals between 1996 and 2002 is the biggest criminal tax case ever pursued by federal prosecutors. Nine people were last week indicted on fraud charges, including seven former partners at KPMG and one former tax manager.
KPMG's US business admitted it helped wealthy individuals to evade tax on billions of dollars of income and capital gains by selling them "fraudulent" tax shelters.
Mr Kelley declined to say whether banks named in a Senate report about KPMG's tax work were under investigation but stressed the broad nature of the probe. He said: "We are not targeting any one area of the whole tax shelter business but we are looking at it from top to bottom, from side to side, and where there are banks, law firms, individuals and taxpayers and so forth involved, we are going to investigate."
The Senate permanent sub-committee on investigations alleged in a report published in February that Deutsche Bank, HVB and UBS provided billions of dollars in lending that facilitated KPMG's tax shelters.
KPMG's US business will pay $456 million (€364 million) in penalties and be monitored by an outside consultant under a deferred prosecution agreement announced last week with Mr Kelley's office.
He rejected suggestions the settlement showed that prosecutors had concluded KPMG was "too big to fail", given it is one of just four big accounting firms offering comprehensive audit services to multinational companies.
Andersen, once the world's biggest accounting firm, collapsed after it was indicted in 2002 over its role in the Enron scandal.
In June KPMG appealed to Mr Kelley and senior officials at the Department of Justice not to seek to put the firm on trial for fear it could be destroyed. - (Financial Times Service)
