Lawyers representing two former KPMG executives asked a judge overseeing their trial on tax charges to declare either a mistrial or dismissal in the tax shelter case.
Defense lawyers for former KPMG tax partner Robert Pfaff and former senior tax manager John Larson argued that prosecutors had changed their theory midway through the trial, starting out by accusing the defendants of tax fraud and altering the allegations to hiding information from KPMG and its tax department about the various tax shelters marketed to clients.
"The new government allegations transform a tax fraud conspiracy with KPMG against the IRS into an honest services fraud conspiracy against KPMG," said the defense motion, according to Reuters.
The defense lawyers said they had not been notified beforehand by prosecutors of the new allegations and had not readied a proper defense. But prosecutors with the U.S. District Attorney's Office in Manhattan countered that the allegations remained the same as always.
"The government has always alleged, and still contends, that KPMG as an entity was a conspirator, not a victim of any kind of fraud," it said in response. "That for a period of time there was an effort to keep certain facts from certain individual KPMG employees is of no moment whatever."
Judge Lewis Kaplan will listen to opening arguments on the defense motion next Tuesday without the jury in the room.
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