A California businessman who claimed he lost millions of dollars after relying on fraudulent tax shelters promoted by KPMG LLP and its Atlanta office has settled with the company, his attorney said Wednesday.
Columbus attorney James Butler Jr. said his client, Christopher Cohan, former owner of a cable TV company and the NBA’s Golden State Warriors, “is very pleased with the settlement,” although he would not disclose a figure.
KPMG’s Atlanta office could not be reached for comment. The audit, accounting and tax advisory firm had denied its tax shelter strategies cost Cohan millions and said the strategies prevented additional fines and penalties.
Butler said Cohan would have no comment on the case.
In 2005, KPMG admitted to tax fraud conspiracy and settled with the U.S. Justice Department and the Internal Revenue Service over the strategies. The company agreed to pay $456 million in fines, restitution and penalties. Former KPMG partners also were criminally prosecuted for their involvement in designing, marketing and implementing the shelters.
Butler said KPMG’s Atlanta office was the “nerve center” of the tax shelter strategies, promising clients they could minimize their liabilities when they sold their companies. The Justice Department said the illegal shelters were marketed from 1996 through 2003.
The government said KPMG generated at least $115 million in fees by arranging the illegal shelters for the wealthy clients the firm targeted.
In 1996, Cohan was seeking a buyer for Sonic Cable TV and eventually sought KPMG’s help in finding tax shelters, the attorney said.
“Because he relied on KPMG’s advice and followed its advice, Mr. Cohan ended up paying over $200 million in taxes, penalties and interest — more than he netted from the sale of his company Sonic, plus he lost his company, which plaintiffs’ corporate valuation expert testified would have been worth $450 million in 2013 had it not been sold in reliance on KPMG’s advice,” Butler said in a statement to The Atlanta Journal-Constitution.
Cohan said KPMG marketed the tax shelters even though it knew the complex strategies were not legal and would not work.
When Cohan filed suit in Fulton County State Court in 2012, he sought $500 million, claiming $281 million in damages and more than $200 million in lost value on Sonic Cable TV.
Butler said Cohan “didn’t get everything he asked for” in the settlement but is satisfied with the outcome. The attorney said he will file for a dismissal when the settlement amount is transferred by wire.