A former accountant at bank HVB Group pleaded guilty in the first prosecution arising from a Senate investigation of tax shelters.

Domenick DeGiorgio pleaded guilty to defrauding the Internal Revenue Service and to charges of wire fraud, tax evasion and conspiracy. Although KPMG LLP was not named by federal prosecutors in U.S. District Court in Manhattan, the tax shelter DeGiorgio admitted selling was known as a "bond linked issue premium structure," one of the types of shelters Senate investigators have said were created and sold by KPMG.

DeGiorgio also admitted receiving several hundred thousand dollars from promoters of the shelters. DeGiorgio, who lives in Cold Spring Harbor, N.Y., was co-head of HVB's Financial Engineering Group when the crimes were committed between 1996 and 2003.

In November 2003, DeGiorgio had testified in a Senate hearing into abusive tax shelters and KPMG's possible involvement.

KPMG has been negotiating with prosecutors in the hopes of avoiding potentially fatal criminal charges over its sale of tax shelters. If the firm were to be found guilty in such a proceeding, it would be barred from doing work with public companies.

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