Posted May 24, 2007 05:42 pm CDT
Chicago-based law firm Sidley Austin has agreed to pay $39.4 million to avoid prosecution in a tax-shelter case.
The government claims the shelters, endorsed by a former partner, are sham transactions created only to create paper losses and tax savings.
The firm acquired its tax-shelter problems when it merged with New York-based Brown & Wood, according to the Chicago Tribune. As a condition of the merger, Brown & Wood partner Robert Ruble had agreed to end his tax-shelter practice in which he wrote opinion letters saying the shelters appeared to be legitimate.
But Ruble secretly continued the practice, according to Sidley Austin. Ruble has been indicted for his alleged role in the transactions. He will be tried in Manhattan along with 16 former employees of accounting firm KPMG and one other person, according to the New York Times.
The 2nd U.S. Circuit Court of Appeals issued a ruling in the KPMG case yesterday, thwarting a judge’s attempt to force the accounting firm to pay the legal fees of its employees in the criminal prosecution, according to the Wall Street Journal (sub. req.).
The court said the trial judge’s only remedy was to dismiss the indictment.