Ex-KPMG partner indicted in tax shelter conspiracy

LOS ANGELES, March 18 (Reuters) - A former partner at accounting firm KPMG [KPMG.UL] was charged with conspiracy and obstructing authorities by concealing fees he and others received for setting up tax shelters, federal prosecutors in New York charged on Tuesday.

Robert Pfaff, 57, of Englewood, Colorado, already faces a trial on unrelated charges stemming from other tax shelters.

No date was set for Pfaff's arraignment on the new charges of conspiracy to defraud the United States and to commit tax evasion and wire fraud, and endeavoring to obstruct and impede the Internal Revenue Service, U.S. Attorney Michael Garcia said in a statement.

According to a two-count indictment filed in New York, Pfaff and co-conspirators at a Saipan company hid millions of dollars in fees from the tax shelter transactions by funneling the money into Philippine bank accounts and distributing them to co-conspirators. According to the indictment, they falsified documents to make it appear that the income was actually a series of loans.

Pfaff failed to report about $3.75 million in income that he received between 1993 and 2000 on his tax returns, the indictment said.

Pfaff also made false statements to the Internal Revenue Service about the fee income, and concealed it from both KPMG and the board of directors of the Saipan company, the indictment said.

The alleged conspiracy took place between 1993 and 2003, according to the indictment.

Garcia said his office has filed a complaint demanding the forfeiture of $1.8 million that Pfaff owes the IRS, the Saipan company and tax authorities in the Commonwealth of the Northern Mariana Islands.

If convicted, Pfaff faces a maximum sentence of five years in prison on the conspiracy count and three years in prison on the IRS obstruction count. He also could be fined up to $250,000 or twice the gross gain or loss from the offenses, Garcia said. (Reporting by Gina Keating; editing by Jeffrey Benkoe)