* Settlement part of wider tax shelter prosecution
* Criminal prosecution deferred under agreement
By Dena Aubin
NEW YORK, June 13 Accounting firm BDO USA has
agreed to pay $50 million to settle charges of selling tax
shelters that generated $6.5 billion in phony tax losses for
wealthy clients, U.S. prosecutors said on Wednesday.
The penalty is part of a wide-ranging, nearly decade-old
government case against illegal tax shelters. Big Four
accounting firm KPMG narrowly avoided an indictment in
2005 over its sale of tax shelters and was fined $456 million.
BDO, formerly known as BDO Seidman, admitted to criminal
wrongdoing and reached an agreement to have criminal prosecution
deferred if certain conditions are met, the U.S. Attorney's
Office in Manhattan said in a statement.
The tax shelters resulted in evasion or attempted evasion of
about $1.3 billion in taxes between 1997 and 2003, the U.S.
Attorney's Office said.
Ranked as the seventh-largest U.S. accounting firm in 2011,
BDO has also agreed to permanent controls on its tax practice,
"This is the latest step in the federal government's
investigations of numerous national accounting, law and
financial services firms, which began almost 10 years ago," the
firm said in a statement. "BDO is pleased that these matters
have been brought to a resolution."
BDO said it had cooperated with the Internal Revenue Service
in the case.
Former BDO Chief Executive Officer Denis Field was indicted
in June 2009 for his participation in the tax schemes and is
The tax shelters, designed to appear to be investments, were
in fact "a series of pre-planned steps that assisted BDO's
high-net-worth clients to evade individual income taxes," the
IRS said in a statement
The shelters were known as spread options, currency option
investment strategies, distressed asset debt, and other names,
the IRS said.