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
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.
David Reilly at