Ernst & Young partners in tax fraud plot

NEW YORK – A former top government tax agency lawyer and three other Ernst & Young partners reduced taxes for Americans making US$10 million (N$70 million) or more with a fraud that even used the September 11 terrorist attacks to disguise their lies, according to an indictment charging the men.

The four current and former partners of the giant accounting firm were arrested on Wednesday and charged with fraud and other crimes relating to tax shelters that were devised beginning in early 1998, the indictment unsealed in US District Court in Manhattan said. The men defrauded the Internal Revenue Service, which is the US tax collection agency, from 1998 to 2004 by designing, marketing and selling fraudulent tax shelters that made it appear as if customers were making investments when they actually were moving money around solely to dodge taxes, the indictment said.The indictment portrayed Robert Coplan as central to the plan.Coplan, a Texas lawyer, once was a branch chief in the IRS’ Legislation and Regulations Division.He worked for Ernst & Young in its Washington, DC, office, though he has since left the firm.In one 2001 letter, Coplan tells a salesperson not to advise clients in writing about strategies for tax shelters because the ultimate goal is to “make our strategies appear to be investment techniques that have advantageous tax consequences,” the indictment said.The court document said Coplan drafted another letter in 2001 to be signed by clients who terminated trading partnerships after obtaining their tax benefits.In that letter, the indictment said, “clients falsely attributed their decision to discontinue their trading activities to the Sept 11, 2001, terrorist attacks and to possible economic repercussions resulting from such attacks”.Coplan, 54, said the letter could be used “as a means of establishing a logical reason for winding down the trading account in the partnership,” the indictment said.Coplan was released on US$1 million bail after a brief appearance in court Wednesday.His lawyer declined to comment outside court.US Attorney Michael Garcia said in a statement that the indictment targets “tax professionals whose deceit costs this country untold millions in tax revenues.”Ernst & Young said in a statement that it has co-operated with the government from the start of the investigation and has voluntarily made changes to its tax practice.The indictment said the four men knew that if the IRS discovered the tax shelters it would aggressively challenge the claimed tax benefits.To hide the tax fraud from the IRS, the partners created documents containing false and fraudulent descriptions of the clients’ motivations for entering into the transactions, the indictment said.Nampa-APThe men defrauded the Internal Revenue Service, which is the US tax collection agency, from 1998 to 2004 by designing, marketing and selling fraudulent tax shelters that made it appear as if customers were making investments when they actually were moving money around solely to dodge taxes, the indictment said.The indictment portrayed Robert Coplan as central to the plan.Coplan, a Texas lawyer, once was a branch chief in the IRS’ Legislation and Regulations Division.He worked for Ernst & Young in its Washington, DC, office, though he has since left the firm.In one 2001 letter, Coplan tells a salesperson not to advise clients in writing about strategies for tax shelters because the ultimate goal is to “make our strategies appear to be investment techniques that have advantageous tax consequences,” the indictment said.The court document said Coplan drafted another letter in 2001 to be signed by clients who terminated trading partnerships after obtaining their tax benefits.In that letter, the indictment said, “clients falsely attributed their decision to discontinue their trading activities to the Sept 11, 2001, terrorist attacks and to possible economic repercussions resulting from such attacks”.Coplan, 54, said the letter could be used “as a means of establishing a logical reason for winding down the trading account in the partnership,” the indictment said.Coplan was released on US$1 million bail after a brief appearance in court Wednesday.His lawyer declined to comment outside court.US Attorney Michael Garcia said in a statement that the indictment targets “tax professionals whose deceit costs this country untold millions in tax revenues.”Ernst & Young said in a statement that it has co-operated with the government from the start of the investigation and has voluntarily made changes to its tax practice.The indictment said the four men knew that if the IRS discovered the tax shelters it would aggressively challenge the claimed tax benefits.To hide the tax fraud from the IRS, the partners created documents containing false and fraudulent descriptions of the clients’ motivations for entering into the transactions, the indictment said.Nampa-AP