Four former Ernst & Young partners have been sentenced for their roles in tax shelter schemes.
Robert Coplan, 57, of Plano, Texas, received a sentence of three years in prison and three years of supervised release by U.S. District Judge Sidney H. Stein in Manhattan federal court on Thursday.
Coplan was also ordered to pay a $75,000 fine. He was the leader of the firms individual tax shelter group, and the former national director of E&Y's Center for Wealth Planning. Coplan, a lawyer, was at one time a branch chief in the IRS's Legislation and Regulations Division.
Martin Nissenbaum, 54, of Brooklyn, N.Y., was sentenced Thursday to 30 months in prison and three years of supervised release. Judge Stein also ordered Nissenbaum to pay a $100,000 fine. Nissenbaum, also a lawyer and former E&Y partner, was a member of E&Ys tax shelter group and the national director of E&Ys personal income tax and Retirement Planning practice.
Richard Shapiro, of Rye, N.Y., who is also a lawyer, was sentenced Friday to 28 months in prison on Friday and ordered to pay a $100,000 fine. Another former E&Y tax partner, Brian Vaughn, a CPA from Calhoun, La., was also sentenced Friday to 20 months in prison. Both Shapiro and Vaughn were also ordered to complete 160 hours of community service a year during two years of supervised release.
Stein ordered all the men to meet with tax professionals after they complete their prison sentences to explain to them the dangers of misleading the IRS, according to BusinessWeek. The judge said he wanted the accounting and legal professions to understand the danger of misleading the IRS.
The defendants were convicted last May after a 10-week jury trial (see Ernst & Young Partners Convicted of Tax Fraud).
The four were found guilty on all counts, including conspiracy, tax evasion and other charges relating to the design, marketing and implementation of a type of tax shelter known as a CDS Add-on. E&Y sold the shelter to wealthy individuals to eliminate, reduce or defer tax liabilities on annual income that generally exceeded $10 million to $20 million.
Designing tax shelter transactions intended to conceal the true facts from the IRS isn't tax planning; its criminal activity, said Victor S.O. Song, chief of the IRS Criminal Investigation Division, in a statement. Today's sentence reinforces our commitment to every American taxpayer to identify and prosecute those who devise illegal tax shelters to assist their wealthy clients to evade their tax obligations.
Between 1999 and 2002, tax shelter transactions implemented by the defendants and their co-conspirators generated billions of dollars in non-economic or paper tax losses that were used to offset actual income or gain recognized by the firm's clients, according to prosecutors. The defendants worked with alleged co-conspirators including tax, accounting, and financial industry professionals and law firms to design, implement and defend the tax shelter transactions in ways intended to conceal the true facts and circumstances of the transactions from the IRS, said prosecutors. They were part of a group at the firm known as Viper, short for Value Ideas Produce Extraordinary Results.
Charles Bolton, who was initially charged as a co-defendant with the four, pleaded guilty on Jan. 22, 2009, to conspiracy to impede and impair the IRS, and is scheduled to be sentenced by Judge Stein on Feb. 3, 2010. David l. Smith, the remaining defendant charged in the indictment, remains at large.
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