Tax

Dishonest Opinion

Former KPMG partner David Rivkin pleads guilty to writing opinions supporting illegal tax shelters; faces 10 years in prison.
Stephen TaubMarch 27, 2006

Former KPMG LLP partner David Rivkin has pleaded guilty to conspiring to defraud the government and to tax evasion, according to Bloomberg.

“I signed opinion letters knowing them to be false, in order to mislead the IRS,” Rivkin said Monday in a New York federal court, according to the report. From 1999 to 2005, Rivkin reportedly elaborated, he and other managers conspired to help individuals who each had more than $20 million in income or capital gains “keep the money for themselves instead of paying taxes they owed.”

Prosecutors investigating the sale of illegal tax shelters have brought charges against a total of 19 individuals, including 17 from KPMG; Rivkin is the first from that firm to plead guilty. Domenick DeGiorgio, a former accountant with Munich-based bank HVB Group, has also pleaded guilty and agreed to cooperate, the wire service reported.

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Rivkin faces as much as 10 years in prison, according to Reuters, but his sentence could be reduced considerably based on his cooperation in the trials of the other individuals, scheduled to begin this fall.

Last August, KPMG entered into a deferred-prosecution agreement that enabled it to avoid an indictment over the sale of questionable shelters. The firm agreed to admit wrongdoing, pay $456 million, and accept former Securities and Exchange Commission chairman Richard Breeden as an outside monitor. The agreement remains in force through the end of the year, at which time charges will be dropped if the firm has abided by its end of the deal.