AUSWR
The Association of U S West Retirees
 

 

 

Judge Approves KPMG Settlement Of Tax-Shelter Suit
By David Reilly
The Wall Street Journal
Saturday, June 3, 2006

A federal judge in New Jersey on Friday approved a final, $154 million settlement of a class-action lawsuit brought against accounting giant KPMG LLP and law firm Sidley Austin LLP for their roles in selling tax-shelter products later deemed improper by the Internal Revenue Service.

The decision brings to a close another chapter in the tax-shelter scandal that has plagued KPMG. The accounting firm escaped a potential criminal indictment related to the matter last year when it entered into a deferred-prosecution agreement with the government and agreed to pay a $456 million fine.

Besides the criminal case, KPMG faced civil litigation from more than 200 wealthy investors who had bought the tax-shelter products.  Friday's settlement ends that litigation, but more than 50 plaintiffs decided to opt out of the agreement and could pursue individual cases.

A spokesman for KPMG said the firm was "pleased the court has upheld the fairness of our negotiated resolution."

KPMG and Sidley Austin will pay $153.9 million to the class-action plaintiffs, as well as an additional $24.6 million in legal fees to lawyers.  Individual plaintiffs will, on average, receive about $825,000, according to figures presented in court by Milberg Weiss Bershad & Schulman LLP, lead counsel for the class-action plaintiffs.

District Court Judge Dennis M. Cavanaugh rejected a motion to void the deal brought by lawyers representing some plaintiffs who thought the terms weren't fair.  The judge also rejected a motion from these same lawyers to remove Milberg Weiss as lead counsel for the plaintiffs.  Steven J. Toll, a lawyer with Cohen, Milstein, Hausfeld & Toll representing some plaintiffs who objected, said he planned to appeal the judge's approval of the agreement.

Write to David Reilly at david.reilly@wsj.com

http://online.wsj.com/article/SB114929070633870300.html?mod=home_whats_news_us