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November 08, 2005

Prosecutors argued yesterday that a former KPMG executive might flee the country if allowed out on bail. Business Week reports:

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.


Some have criticized the prosecution of the former KPMG partners on the grounds that the tax shelters have not been proven illegal. Arguments in Mr. Greenberg's hearing indicate that the firm's response to the government investigation of its shelters may be a critical part of the case:

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.

No bail decision was reached at the hearing.

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