Judge Delays KPMG Tax-Shelter Settlement
A U.S. District Court judge has put the brakes on a proposed $195 million settlement between KPMG LLP and tax shelter investors.
Big Four accounting firm KPMG filed court papers Wednesday seeking time to revise the class-action settlement because more than 60 of 284 eligible investors have decided against participating in the deal, the New York Times reported.
Judge Dennis Cavanaugh decided on Wednesday to delay his final approval of the settlement, which was reached in September. Now both sides have more time to re-examine the deal with no deadlines specified.
The settlement fund is set aside to return fees to investors who bought four particular KPMG tax shelters that were considered unacceptable by the Internal Revenue Service.
KPMG can cancel the deal if too many investors opt out and challenge the claims individually, instead.
Meanwhile, federal prosecutors have widened their abusive tax shelter probe to include law firms, investment firms and banks that helped KPMG develop the tax shelters and market them, the New York Times reported last month.
Three lawyers at a prominent Dallas law firm, Jenkens & Gilchrist, are being investigated. Also, federal prosecutors have contacted the law firm of Sidley Austin Brown & Wood, individuals at several banks, including Deutsche Bank, and several accounting firms, including Ernst & Young. However, the newspaper also stated that it is unclear what transactions the government is questioning, and that none of the parties in question commented.