KPMG LLP received federal court approval for a $153 million settlement with more than 200 wealthy investors who bought questionable tax shelters from the Big Four firm.
In issuing his opinion, U.S. Judge Dennis M. Cavanaugh said that if he had not approved the settlement, the plaintiffs suing KPMG could have faced a number of obstacles in front of a jury, including "the prospect that a jury would not sympathize with the plight of the high-net-worth individuals who make up the class," or that the investors would be held liable for having originally agreed to buy the suspect shelters.
The law firm that advised clients on the shelters, Sidley Austin Brown & Wood, will make payments toward the $154 million settlement.
Last year, KPMG agreed to pay $456 million to avoid prosecution for the tax shelters that it sold between 1996 and 2005, which the government alleges helped Americans unfairly save more than $11 billion in taxes. Eighteen defendants, including 16 former KPMG executives, remain under indictment.
The law firm that brokered the deal, Milberg Weiss Bershad & Schulman, will earn fees of close to $25 million, but faces its own legal challenges. The firm was indicted last month on charges that it had paid a trio of people to lead plaintiffs in more than 150 class-action lawsuits.
Previously on WebCPA:
New York Law Firm Indicted (May 22, 2006)
KPMG Makes Progress on Shelter Lawsuit (April 28, 2006)
KPMG Still Negotiating Deal with Investors (Feb. 10, 2006)
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