A federal judge has agreed to dismiss a criminal charge against KPMG LLP that had accused the Big Four accounting firm of conspiring to sell illegal tax shelters, according to published accounts.

U.S. District Judge Loretta A. Preska approved the request U.S. Attorney Michael J. Garcia to dismiss the charge, concluding that KPMG had met its obligations under a deferred-prosecution agreement with the government.

The order was issued Tuesday and made public Wednesday.

The deferred-prosecution agreement required KPMG to pay $456 million, admit wrongdoing, and accept an outside monitor. Provided that the firm abided by the terms of the deal, the deferred charge was to be dropped after December 31, 2006.

By reaching the agreement, KPMG avoided the fate of Arthur Andersen, which collapsed after federal prosecutors indicted Enron’s former auditor on an obstruction-of-justice charge. (That conviction was overturned in 2005.)

The dismissal of the charge “reflects our commitment to full and continuing compliance with the agreement we made with the government,” said KPMG chairman Timothy P. Flynn in a statement, according to Bloomberg. “We regret the past activities that led to these charges.”

According to The Wall Street Journal, Garcia said a federal monitor will remain in place until September 2008, adding “the charges against KPMG may be reinstituted if it is determined that KPMG has violated any provision of the [agreement].”

Criminal charges remain against 18 individuals — 16 of them former employees of KPMG — according to the Associated Press. Their trial is scheduled for September, the wire service added.

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