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Guilty plea in KPMG tax case

January 11, 2007|From Times Staff and Wire Services

In a move that could help prosecutors press their $2-billion tax fraud case against 16 former executives of national accounting firm KPMG, a California accountant pleaded guilty Wednesday to helping to sell sham tax shelters and agreed to cooperate with prosecutors.

Steven Acosta, 49, of Pasadena pleaded guilty to conspiracy, tax evasion and obstructing an Internal Revenue Service investigation in deals that cost the U.S. $100 million. He faces a maximum sentence of 16 years in prison.

"My client was a small part of a rather large conspiracy," Acosta's lawyer, James Henderson, told U.S. District Judge Denny Chin in New York.

Acosta is the fourth person to plead guilty and agree to aid the government in the case against former executives at KPMG, the fourth-largest U.S. accounting firm.

U.S. prosecutors say the executives cheated the U.S. Treasury out of at least $2 billion by selling illegal tax shelters.

KPMG, after earning about $115 million from sales of the shelters, agreed in 2005 to pay $456 million to settle a case against the firm.

New York-based KPMG promised to cooperate with the government and signed an agreement requiring it to submit to oversight by an independent monitor for three years.

Criminal charges against KPMG were dropped Jan. 3.

In a statement of facts filed with the court, Acosta said a partner named David Greenberg asked him in 2000 to pose as "the independent investment advisor" for clients buying tax shelters that Greenberg had created.

"I understood my name was used to conceal the fact that David Greenberg, the purported independent tax advisor, caused these trades to be made," he said in the statement.

In exchange, Acosta said, he was paid $600,000.

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