Arnold & Porter - IRS settlement ; Partner - guilty plea

[jcolvin2]

http://www.reuters.com/article/marketsN ... 2220080911

Ex-top US law firm partner admits tax fraud shelter
Thu Sep 11, 2008 7:09pm EDT
NEW YORK, Sept 11 (Reuters) - A former partner in the U.S. law firm Arnold & Porter pleaded guilty on Thursday to conspiring to commit tax fraud and tax evasion on behalf of wealthy clients.

The attorney, Peter Cinquegrani, 48, admitted in U.S. District Court in Manhattan that from 1998 to 2001 he and others, including employees of the accounting firm Ernst & Young [ERNY.UL], developed a tax shelter and created a legal opinion they would use to support it.

Cinquegrani also admitted that in 2003 he lied under oath to the U.S. Internal Revenue Service when he was asked about the tax shelter.

The U.S. Attorney's office said from 1998 Ernst & Young designed tax shelters that could be used by wealthy clients "to eliminate, reduce or defer taxes on significant income or gains" and their employees worked with law firms and financial firms.

Cinquegrani pleaded guilty to charges of conspiracy to commit tax fraud, aiding and abetting tax evasion, and aiding in the submission of false and fraudulent documents to the IRS. One former Ernst & Young employee has pleaded guilty in the case. Charges were pending against six other people, four of whom worked with the accounting firm.

The IRS also released a statement saying that it had reached a settlement with the law firm Arnold & Porter over the firm's failure to comply with tax shelter registration requirements and its involvement in a number of tax shelter transactions between 2000 and 2002.

An international law firm with offices in Washington DC, New York, London and other cities, Arnold & Porter said in a statement that it had cooperated with the government investigation.

"The firm previously entered a civil settlement with the Internal Revenue Service in connection with these transactions, and has resolved all related private civil claims," the law firm's statement said.

Cinquegrani, who lives in Baltimore, worked at Arnold & Porter from 1986 through 1993 and again from 1997 through April 2007. He became a partner in 2002. He was employed as an attorney with the IRS from 1994 until 1997.

His sentencing was scheduled for Dec. 11, when he faces up to five years in prison on each of two charges and three years on the third charge. He also may be fined hundreds of thousands of dollars and ordered to make restitution. (Reporting by Grant McCool, editing by Leslie Gevirtz)

© Thomson Reuters 2008 All rights reserved

IR-2008-104, Sept. 11, 2008

http://www.irs.gov/newsroom/article/0,, ... 79,00.html

WASHINGTON — The Internal Revenue Service today announced that it has reached a settlement with Arnold & Porter LLP, which has paid a civil tax shelter promoter penalty. The settlement relates to the Firm’s failure in 2000, 2001 and 2002 to comply with tax shelter registration requirements and its participation in the organization of the following listed transactions that were sold to high-net worth individuals and corporations: Partnership Option Portfolio Securities (POPS), Personal Investment Corporation (PICO), and Family Office Customized Partnerships (FOCUS). The Firm cooperated with the Internal Revenue Service’s examination. The Firm has put into place a comprehensive compliance program designed to assure ongoing adherence to all tax shelter disclosure and list maintenance requirements of the Internal Revenue Code, and related laws.

Arnold & Porter has consented to issuance of this News Release in accordance with Section 6103 of the Internal Revenue Code.