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Big-shot lawyers often come to Washington to help their clients fend off the probing tentacles of the federal government. But last week, lawyers with connections to two of America’s mightiest firms found themselves on the receiving end of a public dressing-down by the Senate Permanent Subcommittee for Investigations. Testifying before the Senate panel were former Cravath, Swaine & Moore partner Lewis Steinberg and Bryan Cave D.C. partner John Barrie. The two tax lawyers had both issued legal opinions to ultrawealthy clients justifying a now-discredited scheme, involving shell corporations in the Isle of Man, that generated tens of millions of dollars in capital losses that were used as tax write-offs. The loss-generating plan, known as POINT, was promoted by Seattle investment company Quellos Group, an organization also at the center of the tax-shelter scandal that has ensnared KPMG and Sidley Austin and has resulted in 19 indictments, as well as KPMG’s agreement to pay the government $456 million. Barrie and Steinberg maintained they hadn’t been given all of the relevant information about the POINT plan when they wrote the opinions. But Sen. Carl Levin (D-Mich.) called the plan, which allowed one investor to purchase a $1.4 billion tax write-off for $50 million, as “phony as a three-dollar bill.” Internal Revenue Service Commissioner Mark Everson said the problem of offshore tax schemes wouldn’t be fixed through more enforcement actions by his agency. “The real answer is making sure the professionals aren’t providing lousy advice,” Everson testified.
Jason McLure can be contacted at [email protected]

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