USA Seizes $123 Million From Ernst & Young

     MANHATTAN (CN) – Federal prosecutors seized $123 million in fees that “certain employees [of] Ernst & Young” earned the company by helping rich U.S. citizens duck taxes.
     The federal forfeiture complaint states: “During the period between approximately 1999 and 2004, through the conduct of certain employees, Ernst & Young, LLP (‘E&Y’), a United States-based international accounting firm, which maintained offices in various United States cities, including New York, New York, assisted high net worth United States citizens in attempting to evade, reduce, and/or defer approximately $2 billion in United States individual income taxes by promoting, implementing, and defending tax shelter transactions, including those sometimes referred to as COBRA, Contingent Deferred Swap (‘CDS’), CDS Add-On, and PICO (the ‘tax shelters’). E&Y personnel engaged in conduct that was unlawful and fraudulent, including: (i) participating in the implementation of certain fraudulent tax shelter transactions; (ii) assisting in the preparation of false and fraudulent factual recitations, representations, and documents as part of the documentation underlying the tax shelters; and (iii) providing false documents and testimony to the Internal Revenue Service about certain of the tax shelter transactions. As a result of this conduct, E&Y generated fee income of approximately $123,000,000.”
     Ernst & Young entered a nonprosecution agreement with Uncle Sam on Feb. 28.
     The $123 million is sued as defendant in rem.

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