Ernst & Young to Pay $123 Million to Settle Criminal Tax Shelter Probe

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Ernst & Young LLP has agreed to pay $123 million and maintain permanent restrictions and controls on its tax practice to settle a criminal investigation into tax shelter promotions, federal prosecutors and tax authorities announce. The nonprosecution agreement is an outgrowth of a case filed in 2007 charging tax partners at the firm with tax fraud conspiracy and other crimes. The four shelters promoted in the case were used by some 200 E&Y clients in an effort to defer, reduce, or eliminate tax liabilities of more than $2 billion, prosecutors say. E&Y acknowledges the conduct of the partners and employees in a statement of facts in the agreement. A former attorney with the defunct law firm Jenkens & Gilchrist is also sentenced to eight years in prison on conspiracy and tax evasion charges for her role in promoting fraudulent multibillion-dollar tax shelters, U.S. prosecutors say.