Big-Four accountant wins appeal

Conviction for designing bogus tax shelters for rich has been overturned

Dec 9, 2012 @ 12:01 am

Five years ago, a Brooklyn, N.Y., accountant named Martin Nissenbaum was indicted and charged with trying to defraud the U.S. government by helping clients set up bogus tax shelters.

But this was no ordinary accountant and no ordinary criminal case. Mr. Nissenbaum was the national director of the personal-income-tax and retirement-planning practice at Big Four accounting firm Ernst & Young LLP.

The tax shelter cases were inherently complex, but they boiled down to an easily understood image of highly paid accountants and lawyers offering the nation's wealthiest people their hush-hush advice on how to cheat Uncle Sam.

“Prosecutors really wanted to get somebody, and judges and juries were ready to accept what the government asserted,” said Nathan Lewin, a prominent defense lawyer in Washington.

Mr. Nissenbaum fought the charges, but the government had e-mail evidence that seemed to lay bare his role in designing the tax avoidance schemes. Ernst & Young wasn't charged, though in 2003, it agreed to pay the Internal Revenue Service a $15 million penalty related to its shelters.

After a 10-week trial in 2009, a jury convicted Mr. Nissenbaum. He was sentenced to 30 months in prison, fined $100,000 and ordered to perform 120 hours a year of community service after his incarceration.

Late last month, Mr. Nissenbaum received stunning news. By a 2-to-1 vote, the U.S. Court of Appeals had thrown out his conviction.

The panel wrote that the crux of the case against Mr. Nissenbaum — a single e-mail — “is simply not enough” to warrant conviction.

“The question is, how do you get your reputation back? And he had a phenomenal one,” said Mr. Lewin, who represented Mr. Nissenbaum, 56, before the appellate court.

A lot of people, understandably, have demanded indictments of the financial world luminaries who led the economy into the abyss four years ago.

For those seeking insight into why prosecutors seem nervous about bringing criminal-fraud cases against Wall Street bigs, Mr. Nissenbaum story may offer a hint.

Aaron Elstein is a senior reporter at sister publication Crain's New York Business.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

How are financial services reacting to 'Times Up?'

There is much left to be done to reach full equality, say Estee Jimerson of Envestnt, but things are improving.

Latest news & opinion

Morningstar evolving well beyond its origins analyzing mutual funds

Led by CEO Kunal Kapoor, firm is moving way past ratings — and financial advisers are paying close attention.

Focus Financial IPO could be a sell signal for RIAs

The $100 million stock offering will fine-tune RIA valuations.

Ex-Edward Jones broker sues former firm, alleging racial bias

Complaint alleges the firm's policies limit African-Americans' 'income and advancement opportunities'

Piwowar defends SEC's best-interest rule

SEC commissioner says the Department of Labor rule set up an 'unworkable, impossible set of standards for people to comply with.'

RIA in a Box acquired by private equity firm Aquiline Capital

New owners plan more growth for the software service provider.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print