Alerts

Federal Judge Declares Unconstitutional Government's Practice of Pressuring Corporations to Cut off Employees' Legal Fees

July 12, 2006

A groundbreaking June 26 decision by a federal district judge in the Southern District of New York has thrown into question the government's controversial practice of pressuring companies to cut off legal expenses for individual employees who the government believes may have engaged in wrongdoing. Ruling in the KPMG tax shelter fraud prosecution, U.S. District Judge Lewis A. Kaplan held that, by pressuring KPMG to refuse to advance defense costs to several current and former KPMG employees after they were indicted, the government violated the individual defendants’ constitutional rights to a fair trial and to the assistance of counsel. United States v. Jeffrey Stein, et al., S1 05 Cr. 0888 (LAK) (S.D.N.Y.).