Ernst And Young Tax Shelter Case Widened

by Glen Shapiro, LawAndTax-News.com, New York

20 February 2008

US Federal prosecutors have widened their criminal investigation into the alleged sale of questionable tax shelters by the accounting firm Ernst & Young, adding two outside defendants.

The new indictment, filed in US District Court in Manhattan, includes charges against new defendants David Smith and Charles Bolton, who both worked for outside firms, and are accused of participating in an alleged tax-shelter fraud.

Additional charges have been laid against the other four defendants, who include: Robert Coplan, a former E&Y tax partner; Martin Nissenbaum, an E&Y partner and the National Director of E&Y's Personal Income Tax and Retirement Planning practice; Richard Shapiro, an E&Y tax partner; and Brian Vaughn, a former E&Y tax partner.

According to the original indictment unsealed in the US District Court in Manhattan in May 2007, between 1998 and 2004 the defendants and their co-conspirators concocted and marketed tax shelter transactions to be used by wealthy individuals with taxable income generally in excess of $10 or $20 million, to eliminate or reduce the taxes they would have to pay to the IRS.

The new indictment adds fraud charges against the original four defendants, and accuses Smith and Bolton of conspiring with them to create and market tax shelters known as CDSs, or contingent deferred swaps.

Ernst & Young itself has not been named as a defendant in the case.

Recommended