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KPMG Judge Wavers on Dismissal

Posted Jul 3, 2007 2:12 PM CDT
By Debra Cassens Weiss

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The federal judge overseeing the criminal prosecution of former KPMG partners appeared to waver on whether he would dismiss charges because of government conduct.

Judge Lewis Kaplan said on Monday that “the ground has shifted” on the question of dismissal and “I don’t know where I am” on the issue, the New York Times reports.

Last year Kaplan ruled prosecutors had violated the constitutional rights of 12 KPMG workers by pressuring the company to cut off their legal fees. The defendants are accused of creating illegal tax shelters.

Kaplan had suggested in last year’s opinion that the defendants could file a civil suit against KPMG for fees and that he could exercise ancillary jurisdiction to hear the case. The 2nd Circuit later ruled that Kaplan did not have that authority and suggested dismissal as a possible remedy.

Prosecutors later acknowledged that dismissal is the proper remedy if there was indeed a constitutional violation. The concession appears to be part of a strategy to get a quick appellate ruling on the underlying constitutional issues, ABAJournal.com explained in an earlier post.

At the hearing on Monday, Kaplan asked the government to provide estimates of the reasonable cost for a defense of the case and the defendants to submit evidence showing their inability to pay, the New York Law Journal reports.

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