A prosecutor insisted Monday the government never demanded or implied that KPMG cut off legal fees for employees who refused to fully cooperate with its probe into allegedly illegal tax shelters.

In a hearing before Southern District Judge Lewis Kaplan, Assistant U.S. Attorney Stanley J. Okula Jr. said the decision of the accounting giant to limit, or threaten to withhold, fees from partners or employees who were subjects in the investigation was not the result of government pressure.

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