Charges against Miers firm next shoe to fall?

Yesterday, in a stunning development, a federal grand jury indicted 10 more people involved with the KPMG tax shelter scam that allegedly robbed the federal treasury of some $2.5 billion in taxes due. Among those named was attorney Raymond Ruble, who was indicted for writing supportive tax opinions that were used in marketing the fraudulent tax schemes to prospective investors.

Sources close to the federal investigation tell WND that Ernst & Young, or E&Y, is still under federal criminal investigation, along with attorneys from Locke Liddell who wrote the supporting legal opinion that was used in marketing the E&Y tax scheme while Harriet Miers – President Bush's nominee for the Supreme Court – was co-manager of the Texas law firm.

In August, to avoid criminal charges against the firm, KPMG settled with the U.S. Justice Department, agreeing to pay $456 million in fines to end the investigation against the firm. E&Y has not yet settled. When questioned by WND, Justice Department officials refused comments on any criminal investigations that may be proceeding against E&Y and Locke Liddell, or their officers and partners.

Earlier this year, on Feb. 8, the Permanent Subcommittee on Investigations of the Senate Committee on Homeland Security and Government Affairs issued a report that focused on the KPMG and E&Y tax dodges. According to page 86 of the subcommittee's report, central to the E&Y fraud was the Locke Liddell letter, characterized as "deficient in many respects." The report documents that Locke Liddell earned approximately $3.5 million in fees for allowing E&Y to market the opinion letter from 1999-2000, while Miers was at the firm's helm.

The criminal investigations reached deep within KPMG's management at the time the tax-shelter scam was perpetrated. Those charged now include KPMG's former deputy chairman, several former heads of KPMG's tax practice, the former head of KPMG's associated general counsel and several former KPMG tax partners. Separately, KPMG and Raymond Ruble's former law firm, Sidley Austin Brown & Wood, agreed to pay $195 million to settle lawsuits with investors who were drawn into the tax-scheme web.

The Permanent Subcommittee on Investigations report focused on tax schemes whose only significant purpose was "the avoidance or evasion of federal, state or local tax in a manner not intended by the law." The report focused on fraudulent legal opinions that were central marketing pieces of the schemes, utilized by tax advisers to reassure trusting prospective investors that their decision to invest should be sustainable under IRS scrutiny. The Senate subcommittee realized that without these legal assurances, prospective investors would be hesitant to rely upon the tax advice, despite the endorsement of the scheme by a major name-recognized accounting firm, such as KPMG or E&Y.

WND has reported a series of fraudulent investment schemes advanced by legal opinions offered by Locke Liddell attorneys while Miers was managing the firm. The additional KPMG indictments today underline the seriousness of the tax offenses involved in the tax schemes Locke Liddell lawyers advanced.

What was Harriet Miers' responsibility as manager of the firm? Is it possible that Harriet Miers may be the first Supreme Court justice ever confirmed by the Senate whose law firm has a public record of defrauding investors while she was at the helm? Does the Senate Judiciary Committee have the courage to fulfill its constitutional responsibility to investigate Locke Liddell's involvement in investment frauds under the management of Harriet Miers before she is put on the Court for life?

Related column:

'Miers fix' is on in Texas

Previous columns:

Miers meant to 'keep lid' on lottery scandals

Is Miers firm under criminal investigation?

Larry Littwin: George Bush's John Dean

Miers protected money launderer?

Did payment to Miers' firm violate law?

Ronnie Earle linked to Miers-run lottery

Were winners cheated on Miers' watch?

Harriet Miers enabled abusive tax shelters?

Harriet Miers contributed to Hillary's election in 2000