The Internal Revenue Service's Office of Professional Responsibility said it has settled a case involving two attorneys and a $31 million bond issuance in Spokane, Wash.

The bond issuance was handled in 1998 by the law firm of Preston, Gates & Ellis LLP, now known as Kirkland & Lockhart Preston Gates Ellis, or K&L Gates. The settlement was with attorneys Michael C. Ormsby, an administrative partner at K&L Gates, and David O. Thompson, a partner at the firm. Both referred questions to a spokesperson at the firm.

The OPR's allegations involved the scope of the attorneys' due diligence, under various Treasury Department Circular 230 rules, including Sections 10.22, 10.29, 10.34 and 10.51j, but the IRS declined to provide further details.

In the settlement, the attorneys agreed to comply with the practices and procedures implemented by their current firm in its public finance group, including submitting new matters to a review and approval process, completing questionnaires and checklists to document the due diligence activities undertaken in the matter, and following practices and procedures established by the firm's opinion committee for municipal bond opinions.

The attorneys also agreed that, for a period of 18 months, any opinion they proposed to deliver in connection with certain specified financings would have to be reviewed and approved by the leader of their firm's public finance group.

K&L Gates emphasized that it did not admit any wrongdoing. "We are pleased to have this matter resolved," said a statement forwarded by spokeswoman Piper Turner, adding, "the resolution does not constitute any admission of wrongdoing by or any sanction of our lawyers."

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