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UPDATE 1-E&Y partners guilty of tax shelter fraud-U.S. jury

* Jury finds E&Y defendants guilty on all counts

* Shelters helped clients avoid or reduce income taxes (Adds details of verdict, byline)

NEW YORK, May 7 (Reuters) - Four current and former partners of Ernst & Young accounting firm [ERNY.UL] were guilty of criminal tax fraud involving tax shelters to help wealthy people evade income taxes, a U.S. jury ruled on Thursday.

U.S. prosecutors charged the four in May 2007 on allegations that between 1998 and 2006 they defrauded the Internal Revenue Service by designing, marketing, implementing and defending tax shelters.

The shelters were meant to help people with taxable incomes of more than $10 million avoid or reduce income taxes, according to the indictment. The bogus tax shelters illegally allowed scores of wealthy investors to evade taxes on billions of dollars in income.

A jury in Manhattan federal court before U.S. District Judge Sidney Stein returned the verdict of guilty on all counts after a two-month trial.

Two of the men on trial were former partners Robert Coplan and Brian Vaughn. The others were Martin Nissenbaum and Richard Shapiro, both of whom are on administrative leave from Ernst & Young, a spokesman for the firm said.

The spokesman declined to comment on the verdict.

The jury, which began deliberations on May 1, found Coplan guilty of five counts, Nissenbaum and Shapiro on four counts and Shapiro on three counts.

Two others from outside the firm were also indicted in the case in February 2008.

One of those defendants, investment adviser Charles Bolton, pleaded guilty in January to helping the firm sell bogus tax shelters. The other defendant, David Smith, is a fugitive.

The case is USA v Coplan et al 07-453 in U.S. District Court for the Southern District of New York (Manhattan) (Reporting by Grant McCool; Editing by Richard Chang)