The long, circuitous prosecution of KPMG LLP executives over the selling of illegal personal tax shelters concluded with a handful of convictions Wednesday afternoon. But some observers saw the mixed-bag result, which included acquittals along with the jury’s guilty verdicts, as a sign that the direction of government tax-shelter enforcement in both personal and corporate cases may change.

Ex-KPMG tax partner Robert Pfaff, ex-KPMG senior tax manager John Larson, and lawyer Raymond Burble, once a partner at Brown & Wood, were convicted on tax evasion counts by a New York federal jury after a two-month trial. Pfaff and Larson were acquitted on one tax evasion count and a conspiracy count, while Ruble was acquitted on two counts of tax evasion.

A fourth defendant, ex-KPMG tax partner David Greenberg was acquitted on all the charges. Greenberg, according to Bloomberg News, had spent five months in prison, followed by three years of home confinement, after his 2005 arrest.

Back then, the case involved 17 former KPMG executives, including its former deputy chairman, Jeffrey Stein, in a case the government described as involving shelters that had cost the U.S. Treasury $2 billion, according to the wire service. But U.S. District Judge Lewis Kaplan had dealt the case several setbacks along the way.

The shelters — designed by an aggressive KPMG operation geared to personal tax planning — came in for at least as much attention as the defendants. They included bond linked issue premium structures, known as Blips; foreign leveraged investment programs (Flips); offshore portfolio investment strategies (Opis); and short option strategies (SOS.)

Doug Whitney, a partner with the firm of McDermott Will & Emery, suggested to CFO.com that the acquittals, in particular, “send the government a strong signal that the criminal courtroom is not the place to define the illusive contours of the economic substance of tax shelters.” Legal experts will come to that conclusion because of “the long and tortured history of the case, combined with the acquittals on the conspiracy charges and the outright acquittal of Greenberg on the evasion charges,” he added. And those signals were just as strong, “if not stronger,” for corporate enforcement.

Whitney said that “reasonable minds will differ on where to draw the lines about what constitutes sufficient economic substance” — what’s needed to make a tax shelter legitimate in the eyes of the law. And the U.S. attorney’s office may have “learned through the last five or six years that trying to criminalize acts on either side of the lines is just too difficult to justify.”

For their part, prosecutors had argued that KPMG executives had realized in 1996 that certain strategies would eliminate the tax liability for clients, and to allow that result created investments that carried no risk, and that generated paper losses that could be used to offset income. Among the complications in the government’s case, however, had been Judge Kaplan’s dismissal of charges against 13 ex-KPMG people after he found that their former employer should not have refused to pay their legal fees.

And, suggested McDermott Will & Emery’s Whitney, the mixed results in front of a jury yesterday could well lead enforcement to look instead for more-obvious violations, especially among the growing number of shelters that involve foreign jurisdictions. “We’ve been dealing with these personal shelters for a decade now, and the new wave appears to be through foreign bank accounts, where major financial institutions have potentially facilitated the sheltering.” He added, “That raises interesting issues of multijurisdictional enforcement that didn’t necessarily exist in this individual sheltering area.”

Tax-shelter design — whether corporate or personal — tends to shift as enforcement displays weaknesses as well as strength. “The code is a living instrument, and particularly with the change in (presidential) administrations, there are going to be a number of changes in the tax code that will require litigation and rulings by the IRS,” which will help illustrate what the tax code really means, Whitney said.

In the KPMG case, a conspiracy charge had been dropped against the accountancy itself in 2006, after it kept its part of a deferred-prosecution agreement with the government. It paid $456 million, and admitted to fraudulent conduct in designing and marketing certain shelters.