Ernst & Young set up various funds, partnerships and other transactions allegedly to make it appear to the IRS that these transactions were part of legitimate investments instead of tax-motivated moves.
For example, the indictment said, one defendant drafted a letter to be signed by clients who wanted to exit these partnerships after obtaining the tax benefits.
In one such letter, the clients falsely attributed their decision to discontinue their trading activities to the Sept. 11, 2001, terrorist attacks, and to "possible economic repercussions resulting from such attacks," the indictment said.
In April 2002, the IRS began investigating whether Ernst & Young had violated tax shelter laws. In June and August of that year, all four defendants appeared before the IRS and answered questions under oath. According to the indictment, they "sought to obstruct and impede the IRS by providing false and misleading testimony concerning the origin, design, marketing and implementation" of the tax shelters.
The Ernst & Young partners charged are:
Robert Coplan, 54, of Plano, Texas, a lawyer with a master's degree in tax law and a partner in Ernst & Young's Washington, D.C., office. Before his employment at the firm, Coplan worked for the IRS as a branch chief in the Legislation and Regulations Division. He is no longer employed by Ernst & Young.
Martin Nissenbaum, 51, of Brooklyn, N.Y., a lawyer with a master's degree in tax law and a partner in Ernst & Young's New York office. He is currently on administrative leave from Ernst & Young but is still employed by the company.
Richard Shapiro, 58, of Rye Brook, N.Y., a lawyer with a master's degree in tax law and a partner in Ernst & Young's New York office. He is currently on administrative leave from Ernst & Young, but he is still employed by the company.
Brian Vaughn, 39, of Calhoun, La., who had a college degree in accounting, is a certified public accountant and a certified financial planner. He is no longer employed by Ernst & Young.