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Guilty Plea Made in Trial Over Shelters From KPMG
By Lynnley Browning  New York Times
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 advisers.

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 in taxes.

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 court filing.

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.”

http://www.nytimes.com/2006/12/22/business/22shelter.html?_r=1&ref=business&oref=slogin