United States v. Stein, a U.S. District Court for the Southern District Court opinion (July 17, 2007) by District Judge Lewis Kaplan, is fascinating reading, and may have significant implications for a number of firms. The opinion opens with “The government threatened to indict, and thus to destroy, the giant accounting firm, KPMG LLP (“KPMG”). It coerced KPMG to limit and then cut off its payment of the legal fees of KPMG employees. KPMG avoided indictment by yielding to government pressure. Many of its personnel did not.”

  Citing its earlier decision that held that the government's interference with KPMG's payment of the legal fees of its employees and former employees violated the employees’ constitutional rights, the court dismissed the indictment for conspiracy and tax evasion as a result of promoting tax shelters for 13 of the 16 KPMG defendants.

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