Perhaps it was fitting that the three highest-stake defendants in the KPMG tax shelter prosecution were sentenced on April Fool's day. KPMG senior tax manager John Larson got 10 years plus and $6 million of fines. KPMG tax partner Robert Pfaff, sentenced on 12 counts of tax evasion in December, will go to jail for more than 8 years, and pay a fine of $3 million. Former Brown & Wood partner R.J. Ruble was convicted on 10 counts of tax evasion and sentence to six and a half years in prison. Two additional defendants who coopearted in the prosecution, David Makov and David Rivkin, have not yet been sentenced.
The first charges connected with hidden assets revealed in the UBS deferred prosecution agreement have also been filed against an accountant, Seven Rubinstein, in the Southern District of Florida. See, e.g., UBS Client Charged with Filing False Tax Return, Apr. 2, 2009. UBS documents provided to the government show significant transactions from 2001 through 2008--a transfer of $3 million out of his Swiss bank account to pay for building a house, a deposit of $2 million in Krugerrand, purchase of securities worth more than $4 million--yet Rubinstein failed to report any income on Swiss bank accounts in his returns or disclose that he had any interest in such accounts. This will likely be "just the first of the prosecutions that will be brought," according to the Justice Department's Tax Division. See Rowley and Voreacos, UBS Client is First to be Charged in US Tax Probe, Bloomberg.com, Apr.2, 2009.
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