New York - Two former KPMG managers who had left the firm over a decade ago received prison terms and multi-million-dollar fines in a long-running tax shelter case.

Former senior tax manager John Larson was sentenced to serve more than 10 years in prison and pay a $6 million fine. Former tax partner Robert Pfaff received an eight-year sentence and was ordered to pay a $3 million fine by Judge Lewis Kaplan of the U.S. District Court in Manhattan. Larson and Pfaff had left KPMG in 1997 to form Presidio Advisory Services. Their convictions were related to their activities after they left the Big Four firm. 

Another defendant, Raymond Ruble, a former partner at the law firm of Sidley Austin, received a six-and-a-half-year sentence. The three men were among 19 defendants in a case that was once billed as the biggest tax shelter case ever prosecuted in the U.S. However, Judge Kaplan dismissed charges against 13 of the original defendants in July 2007, including former KPMG deputy chairman Jeffrey Stein, after he ruled that prosecutors had exerted undue pressure on KPMG to stop paying for their defense, thereby limiting the defendants' legal options and violating their constitutional rights.

Two other defendants have pleaded guilty. Another defendant, former KPMG tax partner David Greenberg, was acquitted in December.

At the trial, prosecutors argued that the defendants had marketed a variety of illegal tax shelter strategies to wealthy clients that enabled them to avoid paying billions of dollars in taxes. KPMG, which was not a party to the trial, paid $456 million in 2005 to avoid prosecution over the creation and marketing of similar strategies between 1996 and the early 2000s.

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