NEW YORK – A former KPMG partner pleaded guilty in the KPMG tax shelter fraud case Monday, admitting he helped rich people escape millions of dollars in taxes by helping them create fraudulent documents and sham companies.
David Rivkin entered the plea in U.S. District Court in Manhattan. He is among 19 people the government has charged with conspiracy for allegedly engineering a massive fraud through accounting firm KPMG LLP.
"I knew that the losses should not have been claimed on the tax forms," Rivkin told U.S. District Judge Lewis A. Kaplan.
Rivkin admitted that he conspired with others between January 1999 and May 2004 to prepare and execute false documents so that clients could file false tax returns.
He also admitted that he took steps to conceal the existence of fraudulent tax shelters from the Internal Revenue Service and avoided registering the shelters with the IRS by claiming attorney-client privileges.
In pleading guilty to conspiracy and tax evasion, Rivkin signed an agreement to cooperate with prosecutors, who could then ask the judge to consider giving Rivkin a more lenient sentence rather than the years he might face in prison. Sentencing was set for Feb. 9, 2007.
Rivkin and his lawyer declined to comment outside court.
The government says the fraud let affluent KPMG clients avoid $2.5 billion in taxes. The Department of Justice has called it the largest criminal tax case ever filed.
According to an indictment, ex-KPMG executives teamed with a former partner at a prominent law firm and another defendant to defraud the IRS by filing false income tax returns and by concealing the tax shelters from the IRS.
KPMG is a worldwide network of professional firms providing audit, tax and advisory services. It operates in 144 countries and has more than 6,700 partners.
KPMG already has admitted helping "high net worth" clients evade billions of dollars in capital-gains and income taxes by developing and marketing the tax shelters and concealing them from the IRS. It has paid a $456 million fine, including $128 million in forfeited fees from sales of the shelters.