Ex-KPMG Partner Pleads Guilty In Tax Shelter Case
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
Just days before a key court hearing to determine whether to dismiss the KPMG LLP tax-shelter case, one of the 19 defendants pleaded guilty to conspiracy and one charge of tax-evasion yesterday in exchange for federal prosecutors dropping other charges against him.
David Rivkin, a tax partner in KPMG’s San Diego office from July 1999 to April 2004, originally faced 39 counts of tax evasion for his role in a tax-shelter scheme in which he helped nine wealthy individuals avoid paying a combined $235 million in taxes. The government alleges the tax-shelter scheme generated about $2.5 billion in illicit tax savings.
Rivkin is one of 17 former KPMG executives to be charged in connection with the sale of the questionable products. The other two defendants are an outside lawyer and investment adviser who helped KPMG structure and sell the products.
Rivkin’s plea deal is expected to increase pressure on the other 18 defendants scheduled to go to trial in the fall in what is seen as one of the most complex, and wide-ranging, tax trials ever brought by federal prosecutors. KPMG has already reached its own deal with prosecutors, agreeing last year to pay $456 million and admit criminal wrongdoing as part of a deferred prosecution deal that allowed the firm to avoid a potentially fatal criminal indictment.
Under terms of his deal with prosecutors, Rivkin, 42 years old, faces up to five years in prison for each count, but is expected to receive a reduced sentence for his testimony against other defendants in a trial expected to start in September. He remains free on bail and is scheduled to be sentenced next February.
It isn’t clear, though, how much light Rivkin will be able to shed on actions by more senior KPMG employees, because he was less involved with the shelters than some others charged in the case. Other KPMG employees charged in the matter include Jeffrey Stein, the firm’s former deputy chairman; Richard Smith, former vice chairman for tax; and John Lanning, former vice chairman for tax services.
A certified public accountant, Rivkin worked in California at the firm’s so-called Innovative Strategies group.
