Plea Made in Trial Over Shelters From KPMG
By Lynnley Browning New
Friday, December 22, 2006
A businessman pleaded guilty yesterday to charges of
conspiracy and fraud and agreed to help federal prosecutors
pursue indicted former employees of the accounting firm KPMG
in a widening investigation into questionable tax shelters.
The businessman, Chandler Stuart Moisen, who appeared in
Federal District Court in Manhattan, is the third person to
enter a guilty plea in the tax shelter investigation, which
has ensnared accountants, bankers, lawyers and investment
An assistant United States attorney, Stanley Okula, told the
court yesterday that Mr. Moisen was expected to testify
against some of the 16 KPMG defendants who are scheduled to
stand trial in September over questionable tax shelters that
prosecutors say deprived the Treasury of billions of dollars
Although Mr. Moisen is a relatively minor figure in the tax
shelter inquiry, his offer to cooperate with the prosecution
could have major consequences for the KPMG defendants, in
particular for Robert Pfaff, a former KPMG partner with whom
Mr. Moisen worked closely to sell questionable tax shelters.
Mr. Moisen lived recently in Park City, Utah, and has lived
in Colorado, Southern California and abroad.
The charges against Mr. Moisen refer to a Denver accountant
and a former KPMG partner but do not name Mr. Pfaff. Mr.
Moisen’s lawyer, Thomas H. Beinert Jr., however, confirmed
that Mr. Pfaff is the Denver accountant referred to in the
David Scheper, a lawyer for Mr. Pfaff, could not be reached
for immediate comment.
In exchange for pleading guilty to one count of tax fraud
conspiracy and one count of wire fraud for making and
selling bogus tax shelters, Mr. Moisen, 51, waived his right
to a trial and will not be indicted. He faces as much as 35
years in prison.
In a statement before the court, Mr. Moisen said, “During
the 1990s and up to the early 2000s, I was involved with
several individuals in creating tax shelters.” He said his
involvement included marketing the shelters, finding wealthy
investors to buy them, referring clients to Mr. Pfaff, among
others, and hiding money earned through selling the
shelters. The shelters were known as ZENS, for zero
enhanced note structure; 357c; and Midco.
According to the felony information filed against Mr.
Moisen, from 1993 to 2002, he enabled millions of dollars to
be transferred to companies in the Philippines and in Norway
that served as “puppets” to carry out the bogus tax shelters
for wealthy investors.
Mr. Moisen also worked with several co-conspirators,
including a former senior banker at the HVB Group, Domenick
DeGiorgio. In August 2005, Mr. DeGiorgio pleaded guilty to
charges of conspiracy, fraud and tax evasion for making and
selling bogus tax shelters while at the New York office of
HVB, the large German bank. In March, David Rivkin, a
former partner at KPMG in San Diego who was indicted with
the 16 other former KPMG employees, pleaded guilty to
charges of conspiracy and tax evasion and agreed to help
prosecutors against his indicted former colleagues.
According to the felony information, Mr. Moisen, Mr.
DeGiorgio and Mr. Pfaff had elaborate fee-splitting
arrangements for the millions of dollars they earned from
their sales of tax shelters.
In the felony information, prosecutors also cite an August
2001 e-mail message from Mr. Moisen to Mr. DeGiorgio titled
“Us getting rich.” In it, Mr. Moisen writes: “Dom, one of
my recurring nightmares involves you/me and our receipt of
$. The first used to be that somehow the bank would catch
you and we would all go to jail because we were violating
federal banking laws.”
Apparently referring to Mr. Pfaff, he went on: “That
concern of course was started by Bob and has largely
dissipated. The second nightmare is that the IRS. catches
on and you/we are nailed for income tax evasion. People go
to jail for that one.”
Mr. Moisen then wrote, “I would assume that the government
would not have a lot of mercy, considering that the source
of the funds was profits from tax shelters.”