|30 May 2007 13:04:35|
|Partners of Ernst & Young Charged for Tax Fraud Conspiracy|
Partners of Ernst & Young Charged
Wednesday May 30, 12:55 pm ET
By Larry Neumeister, Associated Press Writer
Ex-Ernst & Young Partners Accused of Tax Fraud Conspiracy
NEW YORK (AP) -- Four current and former partners of the giant accounting
firm Ernst & Young were charged Wednesday with fraud and other crimes
relating to tax shelters that helped the wealthy escape taxes on incomes
exceeding $10 million.
All four worked in a group set up by the company in 1998 to develop tax
shelters, according to an indictment filed in U.S. District Court in
Manhattan. The men allegedly defrauded the Internal Revenue Service from
1998 through 2004 by designing, marketing and selling fraudulent tax
U.S. Attorney Michael Garcia said in a statement that the indictment targets
"tax professionals whose deceit costs this country untold millions in tax
Ernst & Young said in a statement that it has cooperated with the government
from the start of the investigation and has voluntarily made changes to its
The indictment said the four men knew that if the IRS discovered the tax
shelters, it would aggressively challenge the claimed tax benefits.
To hide the tax fraud from the IRS, the partners created documents
containing false and fraudulent descriptions of the clients' motivations for
entering into the transactions, the indictment said.
Lawyers for two of the men said their clients were innocent and have been
cooperating with authorities. Lawyers for the other two did not immediately
return calls for comment.
Court papers said the men enticed clients to participate in the shelters by
getting law firms to provide letters claiming that the tax shelter losses or
deductions would "more likely than not" survive IRS challenge. The partners
knew the opinions were based on fraudulent statements, but thought they
would undermine the ability of the IRS to determine the clients' tax
liabilities and to decide whether penalties should be imposed, according to
The partners were seeking entry into the highly lucrative tax shelter market
that was already being explored by other companies, the indictment said.
Prosecutors charged Robert Coplan, 54, a Plano, Texas, a lawyer who once was
a branch chief in the IRS' Legislation and Regulations Division; Martin
Nissenbaum, 51, of Brooklyn, a lawyer; Richard Shapiro, 58, of Rye Brook,
N.Y., also a lawyer, and an accountant, Brian Vaughn, 39, of Calhoun, La.
Nissenbaum and Shapiro are current partners on administrative leave, while
Coplan and Vaughn are former partners.
They were charged with conspiracy to defraud the IRS, tax evasion, making
false statements and impeding the IRS.
John J. Tigue Jr., a lawyer for Shapiro, said in a statement that
authorities are prosecuting an innocent man. He said Shapiro for five years
has fully cooperated with investigators.
"He intends to vigorously defend himself against these baseless charges at
trial," Tigue said.
Charles Clayman, a lawyer for Martin Nissenbaum, said in a statement that
his client had cooperated over the last year with investigators.
He said his client expects to be acquitted.
Lawyers for Coplan and Vaughn did not immediately return telephone messages
Ernst & Young said in their statement that the men, none of whom were among
the firm's management, were part of a small group within the firm that
partook in the transactions. The group was disbanded years ago, the company