KPMG Partners, Employees Probed

Federal agents deliver notification letters in person to the accounting firm's offices.
Stephen TaubMarch 8, 2004

Federal prosecutors probing tax shelters sold by KPMG have notified about 30 of the accounting firm’s current and former partners and employees that they are “subjects” of the investigation, according to The Wall Street Journal.

In at least a few cases, federal agents have delivered letters in person at KPMG offices, the paper reported, citing a person familiar with the matter. The investigation reportedly appears to be focusing on three shelters pitched to wealthy clients.

There is a big legal difference between being called a “subject” of an investigation and being dubbed a “target,” however. The latter is a person or firm prosecutors consider to a defendant and who is likely to be indicted, The Journal explains. By identifying individuals as subjects, prosecutors mean that they believe that those individuals are engaged in suspicious behavior and fall within the scope of the investigation.

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By contacting a large number of subjects, prosecutors can put people on notice and encourage them to cooperate.