David Amir Makov, one of the remaining defendants in the KPMG tax shelter case, pleaded guilty in Federal District Court in Manhattan to one count of conspiracy to commit tax fraud and agreed to cooperate with prosecutors.
Makov described in a statement the work he did as an investment advisor at Presidio Advisory Services, which helped KPMG and a bank set up bogus tax shelters. The shelters, known as Bond Linked Issue Premium Structures, produced billions of dollars in artificial tax losses to offset gains in income. Makov also implicated two other principals at Presidio, John Larson and Robert Pfaff. They are set to go on trial next month.
The judge overseeing the case, Lewis A. Kaplan, dismissed charges in July against 13 of the defendants, most of them from KPMG, complaining that prosecutors had been heavy-handed in pressuring the firm not to pay for their legal fees (see Judge Drops KPMG Charges). Nineteen people were indicted in 2005. One pled guilty in 2006 and agreed to cooperate with prosecutors.
In addition to Larson and Pfaff, the remaining defendants include Raymond Ruble, a former law partner, and David Greenberg, a former KPMG partner. Makov agreed to forfeit $10 million as part of his guilty plea and still awaits sentencing. KPMG agreed in 2005 to pay $456 million in a deferred prosecution agreement with the government to avoid criminal prosecution. The firm admitted to fraudulent conduct with the design and marketing of some of its tax shelters.
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