Government Asks To Reinstate KPMG Indictments; Judges Express Doubt

A three-judge panel from the US Court of Appeals for the Second Circuit on Tuesday heard arguments in the government’s attempt to reinstate the indictments of 13 former KPMG LLC executives in what was once the largest criminal tax shelter prosecution in US history. In July 2007 US District Judge Lewis Kaplan dismissed the indictments of 13 out of an original 19 defendants in US v. Stein et al because the government threatened to indict KPMG if the company did not stop paying the defendants’ legal costs despite contractual obligations to do so. The Bloomberg News story indicates that the judges were highly critical of the government’s arguments. While AUSA Karl Metzner contended that a fair trial was still possible and that dismissal of the indictments was “too drastic a sanction” despite Kaplan’s ruling that the government’s actions violated the defendants’ rights, Chief Circuit Judge Dennis Jacobs noted that “time has moved forward” and Judge Peter Hall likened a reinstatement to “putting toothpaste back in the tube”.