The government’s showpiece tax shelter case nearly blew up today.
Judge Lewis Kaplan of Federal District Court in Manhattan, reluctantly dismissed charges against 13 employees from the accounting firm KPMG, according to The New York Times.
Kaplan, in his ruling, swiped at prosecutors for violating the defendants' constitutional rights by pressuring their former employers to cut off payment of their legal fees.
Kaplan wrote that the prosecutors' actions “foreclosed these defendants from presenting the defenses they wished to present and, in some cases, even deprived them of counsel of their choice. This is intolerable in a society that holds itself out to the world as a paragon of justice. The responsibility for the dismissal of this indictment as to thirteen defendants lies with the government.”
Still, the government will likely pick itself up and reassemble the case. The upside is that ruling protects against any conviction prosecutors might have earned being overturned on appeal because of the legal fees question. And they still have a case -- albeit it a leaner one -- expected to go to trial. (Kaplan declined to drop charges against three of the defendants.)