Former KPMG LLP partners accused of creating bogus tax shelters are suing the firm for legal fees, after a judge ruled that prosecutors wrongly pressured the firm to cut those fees off. 2

Former KPMG LLP partners accused of creating bogus tax shelters are suing the firm for legal fees, after a judge ruled that prosecutors wrongly pressured the firm to cut those fees off.

In a civil complaint, the 16 former partners are asking U.S. District Judge Lewis Kaplan in Manhattan to direct KPMG to pay their past and future legal bills in the case.

On June 26, Kaplan said prosecutors violated the defendants’ constitutional rights to a fair trial and assistance of counsel in pushing KPMG to cut off fees. He invited the defendants to submit claims for legal bills.

According to the complaint, KPMG broke an “implied contract” to advance fees “consistent with KPMG’s 30-year unbroken practice of doing so in civil, regulatory, and criminal cases and prosecutions.”

George Ledwith, a KPMG spokesman, declined to comment. A lawyer for one of the plaintiffs provided the complaint.

The government is accusing the former partners and two other defendants of defrauding the Internal Revenue Service by setting up fraudulent tax shelters for wealthy clients.

Prosecutors say the scheme cost the government $2.5 billion of taxes, and won KPMG $115 million of fees.

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