Accounting firm KPMG and a law firm have agreed to pay $195 million to as many as 280 wealthy investors who bought four types of questionable shelters, the first major step by the two firms to deal with billions of dollars in potential civil claims.The pact also calls for the firms to pay the lead plaintiffs’ lawyers $30 million in fees. Papers describing the settlement were filed in federal court in Newark this week; it will be presented to a judge next week for approval.The settlement covers four tax shelters known as Blips, Flip, Opis and SOS that were sold to investors to help them evade billions of dollars in taxes. All but the SOS shelter were cited in the $456 million deferred-prosecution agreement reached last month that allowed KPMG to avoid a criminal indictment. The settlement covers buyers of the shelters who received legal opinions or representations from KPMG and the law firm of Brown & Wood, now Sidley Austin Brown & Wood, from January 1, 1996 through September 14 of this year. KPMG used other law firms to sell the four shelters, but the settlement covers only those bought through the accounting firm and Brown & Wood. Sidley Austin Brown & Wood will pay about 20 per cent of the $195 million, according to a person briefed on the settlement. Sidley Austin Brown & Wood wrote legal opinions blessing the transactions.The size of the civil settlement — which amounts to an average of $696,000 for each eligible investor — may offer small consolation to KPMG’s former clients, whose tax bills from the shelters, including interest and penalties, ran into the tens and even hundreds of millions of dollars.Lawyers at Milberg Weiss Bershad & Shulman, which is seeking lead counsel status for the class, said the dollar amounts primarily reflected the fees paid to KPMG and Brown & Wood, and not the taxpayers’ actual losses or penalties. — NYT
