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LOS ANGELES � A lawyer in Irvine, Calif., and his former firm have reached an agreement with federal agents who are seeking documents related to the criminal investigation of fraudulent tax shelters sold by accounting giant KPMG. A federal judge last year ordered William A. Goddard and his firm, Lee, Goddard & Duffy, which is now defunct, to turn over documents to the Internal Revenue Service (IRS) in response to two civil tax summonses. The IRS is investigating whether Goddard and his firm were involved in promoting fraudulent KPMG shelters, according to court documents. In 2005, federal prosecutors charged more than a dozen former employees of KPMG, and two other professionals, with defrauding the U.S. government out of billions of dollars in federal taxes using various kinds of fraudulent shelters. Earlier this month, U.S. District Judge Lewis A. Kaplan of the Southern District of New York, who is overseeing the criminal case, dismissed charges against all but three of the KPMG defendants, claiming prosecutors illegally pressured the accounting firm not to pay their legal costs. KPMG, to avoid indictment, has settled for $456 million. It’s unclear whether Goddard, who did not return calls, could face civil penalties or criminal charges. Goddard’s lawyer, John Gordon, a partner at Los Angeles-based Quinn Emanuel Urquhart Oliver & Hedges, and Thom Mrozek, a spokesman for the U.S. Attorney’s Office for the Central District of California, which is pursuing the summonses against Goddard, declined to comment. Law firms involved Several law firms have been implicated in the KPMG criminal case. In March, Dallas-based Jenkens & Gilchrist, which has since shut down, agreed to pay $76 million in civil penalties to the IRS and federal prosecutors for promoting fraudulent KPMG tax shelters. Two months later, Sidley Austin paid $39.4 million to the IRS in a civil action related to the KPMG case. A former lawyer at the firm, Raymond J. Ruble, remains under indictment. Also, federal prosecutors brought an indictment in May against four current and former partners at accounting firm Ernst & Young that includes ties to unnamed law firms. This month’s issue of The American Lawyer, an affiliate of The National Law Journal, identified those firms as Locke Liddell & Sapp, Sidley Austin, Washington-based Arnold & Porter and New York’s Proskauer Rose. Goddard, whose connection to the case remains largely under the radar, worked with David Greenberg, one of the three former KPMG defendants whose case wasn’t dismissed, according to lawyers involved in the KPMG case who spoke on condition of anonymity. Calls were not returned by Richard Strassberg, a partner in the New York office of Boston-based Goodwin Procter, who represents Greenberg, the only defendant in the case to serve jail time. Greenberg connection Goddard handled all the KPMG matters at his former firm, said Anthony Duffy, a former name partner who left for another firm in 2002. “I don’t know what he was doing other than tax-shelter work,” he said. “I know he had a friend who was referring work who was originally with Deloitte and then KPMG, David Greenberg.” But Duffy, a litigator who joined the firm in 1997, said he “never shared in any of the money, and never got involved in any of it.” Raymond Lee, another former name partner of the firm, who is now the managing shareholder of the Costa Mesa, Calif., office of Greenberg Traurig, did not return calls seeking comment. According to the KPMG indictment, Greenberg, who was a tax partner at KPMG’s Los Angeles office from 1999 to 2003, attempted to conceal fraudulent shelters from the IRS by appearing to have his clients retain an “Orange County Law Firm” to provide legal advice, which was protected by attorney-client privilege. Last year, U.S. District Judge David Carter of the Central District of California ordered Goddard, now at Goddard LLP, to comply with the tax summonses. According to the order, the IRS is investigating Goddard and his former firm, referred to as LGD, for “potential promoter penalties” related to the fraudulent KPMG shelters. “The IRS has concluded that LGD promoted and facilitated these shelters, and that several of LGD’s principals personally participated in the shelters as investors,” the order states, adding that 70 investors who used the shelters have been linked to Goddard and his firm. The firm turned over 10,000 pages of documents, but rejected an IRS agent’s request for additional information related to 24 individuals and companies, court papers say. Both sides reached an agreement on July 23, but details were unavailable.

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