KPMG Tax Shelter Probe Widens, Another Firm Enters the Picture
Presidio Advisory Services LLC, a San Francisco-based company founded by two former KPMG partners, has been "informally" contacted by federal prosecutors looking into three of KPMG’s tax shelter strategies.
KPMG, one of the "Big Four" accounting firms, admitted last week that it is the subject of a federal probe "in connection with certain tax strategies," the Wall Street Journal reported.
The complex strategies in question, known by the acronyms FLIP, OPIS and BLIPS, were often sold to wealthy clients looking—in most cases—to offset large capital gains taxes after selling businesses, sources told the Journal.
Multiple firms were involved in the sale of the strategies, including banks Deutsche Bank AG and Wachovia Corp. and the law firm now known as Sidley Austin Brown & Wood LLP, the Journal reported, adding that none chose to comment as to whether they are targets of the investigation.
An attorney for Presidio, founded in the late 1990s, confirmed that the company has been contacted in relation to the investigation. "Presidio was contacted informally by the government," Steven Bauer, a lawyer representing the firm, told the Journal, adding that his client is cooperating.
KPMG also said it is cooperating and it has stopped selling the three strategies, which brought in $100 million in fees for the firm in the late 1990s, according to a report by a Senate subcommittee investigating tax shelters, the Journal reported.