NEW YORK (AP) – A former KPMG executive should remained jailed as a flight risk and a danger to the community on charges he helped concoct a tax shelter fraud so rich people could evade their taxes, a prosecutor said Monday.
David Greenberg amassed more than $24 million and then tried to hide it from the government by transferring money elsewhere, including to his ex-wife, prosecutor Kevin Downing said at a hearing. Greenberg, who earned $500,000 yearly from KPMG, also had real estate investments that appreciated, his attorney said.
The argument against bail came after Greenberg pleaded not guilty to the latest indictment in what the Department of Justice has described as the largest criminal tax case ever filed. The government says the fraud allowed affluent KPMG clients to avoid $2.5 billion in taxes.
Downing told U.S. District Judge Lewis A. Kaplan there were no conditions of bail that would ensure Greenberg's appearance at trial and called him an “ongoing danger to the community.” He dismissed as insufficient $4 million in property that Greenberg's family offered to post for the bail.
Greenberg's lawyer, John N. Nassikas III, said he assumed the prosecutor was referring to his client as a financial threat to the community. He said his client was no threat and had strong ties to California, including a pregnant fiance.
“We heavily dispute Mr. Greenberg's alleged role,” Nassikas said. “There's not an effort to hide information.”
But Downing insisted otherwise, saying the government had a cooperating witness and substantial documents to indicate Greenberg backdated documents and improperly took them out of KPMG offices after he learned he was being investigated in 2002.
He said the witness told investigators Greenberg had planned to flee the country with $16 million to $20 million that was held in his ex-wife's accounts and elsewhere.
Kaplan reserved decision on bail after criticizing Nassikas, saying he was not answering his questions directly.
Greenberg was among 19 people charged with conspiracy for allegedly engineering a massive fraud through accounting firm KPMG LLP that enabled rich clients to avoid billions of dollars in taxes through bogus tax shelters.
KPMG already has admitted helping “high net worth” clients evade billions of dollars in capital-gains and income taxes by developing and marketing the tax shelters and concealing them from the IRS. It has paid a $456 million fine, including $128 million in forfeited fees from sales of the shelters.
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