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Patton v. KPMG LLP, Case No. 3:05-CV-88 (W.D.N.C. 2005): Investment Fraud/Abusive Tax Shelter.

Charlotte Observer, The (NC)
2006-03-02
Section: BUSINESS
Edition: ONE-THREE
Page: 2D
Column: Bank Notes

BANK NOTES

AN OCCASIONAL ROUNDUP OF NEWS IN THE NO. 2 BANK TOWN.

   RICK ROTHACKER, Staff Writer

Tax shelter lawsuits sent to state court

A federal magistrate judge in Charlotte has recommended three lawsuits that allege accounting firm KPMG and Wachovia Corp. pitched improper tax shelters to wealthy individuals be sent back to state court.

The ruling this week could jump-start long-delayed suits by former MedCath Corp. chief executive Steve Puckett and two other sets of plaintiffs. KPMG, Wachovia and other defendants can still object to Judge Carl Horn's order.

The suits were originally filed in state court, but the defendants moved them to federal court, where they sought arbitration. KPMG and Wachovia argued the cases should be heard in federal court because they involved "foreign transactions," but in his order Horn said the companies could not invoke federal jurisdiction for "sham transactions."

Jim Roberts was lead counsel for the plaintiff.