Federal prosecutors have notified as many as 20 former partners at Big Four firm KPMG LLP that they may face criminal charges for selling illegal tax shelters.

According to The Washington Post, "tough concessions" from KPMG are likely to be the price of any settlement, although lawyers are still investigating individual executives and weighing whether or not to press criminal charges against the firm. The report said that negotiations between KPMG and prosecutors were continuing and a resolution could be weeks away.

Earlier this year, New York prosecutors recommended that KPMG face criminal charges, but Washington Justice Department officials pointed to the 2002 failure of Arthur Andersen LLP and expressed concerns about the prospect of another major accounting firm collapse.

In January 2004, KPMG announced congressional scrutiny into its past shelter activitie after a November 2003 report compiled by a Senate Government Affairs Subcommittee showed that KPMG collected roughly $124 million in fees from shelters from 1997 through 2001.

Earlier this summer, KPMG issued a statement apologizing for "unlawful" activity by former partners and pledged to cooperate with investigators. The firm turned over batches of documents, pressured dozens of tax executives to resign, and imposed caps on their attorney fees.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access