Former chief financial officer Richard Rosenthal was among 10 additional individuals indicted in the widening tax-shelter scandal at KMPG.
“This was an orchestrated case of deliberate tax evasion, and not legitimate tax planning,” said Michael Garcia, U.S. attorney for the Southern District of New York, according to the Financial Times.
This brings to 19 the total number of people now facing counts that include conspiracy to defraud the government, tax evasion, and obstruction of internal revenue laws, according to Reuters. All but one of the new defendants is expected to voluntarily surrender and be arraigned on the charges next Monday, according to the Associated Press. One individual faces an arrest warrant, the wire service added.
In August, when KPMG agreed to pay $456 million in fines, restitution, and penalties, the Department of Justice referred to the case as “the largest criminal tax case ever filed,” costing the United States at least $2.5 billion in evaded taxes.
At that time, eight former partners of the Big Four firm as well as an outside lawyer who worked with KPMG, were charged with conspiring to defraud the Internal Revenue Service through the creation and sale of abusive tax shelters. Jeffrey Stein, a former deputy chairman of the firm; Richard Smith, a former partner; and Raymond Ruble, a former partner of the law firm Sidley Austin Brown & Wood, were among those indicted.
The revised indictments bring additional counts of tax evasion against Stein and Smith, according to Reuters. They face as much as five years in prison on the earlier conspiracy charge and another five for the new tax-evasion charge, the wire service added. The new indictment reportedly accuses the defendants of designing and implementing certain tax shelters that were fraudulently designed to generate phony tax losses between 1996 and 2005.
In addition to Rosenthal, other individuals newly indicted include Steven Gremminger, a former KPMG associate general counsel; Larry DeLap, formerly the partner in charge of KPMG’s department of professional practice for tax; Gregg Ritchie, a former division head in KPMG’s tax practice; and four other former KPMG partners, Randy Bickham, Carl Hasting, David Rivkin, and Carol Warley.
Israeli investment adviser David Amir Makov, whose firm assisted KPMG in tax-shelter sales, was also indicted, according to The Wall Street Journal.
The Journal reported that DeLap’s lawyer, Lawrence Barcella, told the paper prosecutors “are using 2005 eyes to view actions in 1997, 1998, and 1999 that certainly no one considered criminal at the time.” Ritchie’s lawyer, Michael Horowitz, reportedly said that the “government is seriously overreaching in this case, and Mr. Ritchie looks forward to being vindicated at trial.”
The newspaper added that Rivkin’s lawyer, Gregory Vega, asserted his client relied on the firm’s tax experts and “did nothing improper or illegal,” and that Warley’s lawyer, James DeVita, said “my client is not guilty of any crimes.” Lawyers for Rosenthal, Hasting, Bickham, and Makov either declined comment or were unavailable for comment.