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KPMG Prosecutors Concede Key Point

Posted Jun 26, 2007 8:01 AM CDT
By Debra Cassens Weiss

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Government lawyers have acknowledged that dismissal of charges is the appropriate remedy for 12 former KPMG employees—if prosecutors indeed violated the Constitution by pressuring their employer to cut off legal fees.

In legal papers filed Friday, the government says it continues to maintain that a judge’s finding of a constitutional violation is unsupported by the law or the facts, the New York Law Journal reports.

The government charged the defendants with helping to create illegal tax shelters. U.S. District Judge Lewis Kaplan of New York ruled last year that the prosecutors’ conduct violated the defendants' Fifth and Sixth Amendment rights. "KPMG refused to pay because the government held the proverbial gun to its head," he wrote.

Observers told the legal newspaper that the government's latest stance may be part of a strategy to get a quick ruling on the constitutional issues by the 2nd U.S. Circuit Court of Appeals.

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

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