LOS ANGELES (CN) – Accounting giant KPMG made a former partner the fall guy in one of the biggest tax-fraud cases in U.S. history and still owes him $30 million in lost wages and attorney fees, the ex-employee claims in Superior Court.
David Greenberg, who worked in KPMG’s Los Angeles office, was one of four people charged with using tax shelters to help wealthy people evade more than $1 billion in state and federal taxes.
While two KPMG executives and a lawyer working for the company were convicted last year on charges of defrauding the government, Greenberg was ultimately exonerated by a jury.
In addition to back pay, the accountant seeks $20 million for defamation and the emotional distress he allegedly experienced during the five months he was in jail awaiting trial.
Greenberg worked for the firm for six years in the early 1990s, and rejoined it in 1999, first as a senior manager and then a partner.
The complaint says KPMG’s management wrongly singled out Greenberg as a rogue employee to cover up a tax-evasion conspiracy that stemmed from a “pervasive firm culture … to maximize profits, oftentimes at the expense of professional ethics and obligations to clients.”
Greenberg says he believed the products he was asked to promote were approved by the highest level of management, and that all of the products offered to high net worth clients were legal tax strategies.
Dan Ginsburg, a KPMG spokesman, characterized the claim as “baseless.”
The illegal tax shelters at the heart of the case were initially exposed by a whistleblower in 2003. Two years later, the U.S. Justice Department indicted 19 in connection with the scheme, although charges against most of the accused were dismissed after the court found the government unfairly prevented KPMG from paying their legal fees.
Greenberg claims that, to date, he is the only defendant who has not had his legal expenses paid by KPMG. Despite being exonerated of criminal charges by a federal jury, Greenberg says he is still the target of several civil suits that have cost him $10 million in legal fees.
Greenberg is represented by Bradley Patterson of Lawyers Group International.
KPMG is one of the nation’s Big Four accounting firms, along with PricewaterhouseCooper, Deloitte Touche Tohmatsu, and Ernst & Young. Its clients include Citibank, Fannie Mae, Occidental Petroleum, AIG, Goldman Sachs, Berkshire Hathaway, and Countrywide Financial.