Sidley Austin Dodged Criminal Charges for Tax Shelter Opinions

The Internal Revenue Service on May 23rd 2007 issued a Press release(IR-2007-103) ..."Sidley Austin LLP Pays IRS $39.4 Million Penalty "

It appears that the IRS had reached " a settlement" with the law firm of Sidley AustinLLP, (who handled Northern Rock dealings with "Granite") the successor firm of the merger in 2001 between Sidley & Austin and Brown & WoodLLP, which has paid a civil tax shelter promoter penalty of $39.4 million. The penalty stems from the firm’s promotion of abusive tax shelters and a failure to comply with tax shelter registration requirements.

“Sidley Austin has paid a significant penalty for its role in promoting abusive tax shelters,” said IRS Acting Commissioner Kevin M. Brown was handsome in his acceptance that an agreement had been reached. ““Sidley Austin has paid a significant penalty for its role in promoting abusive tax shelters. The firm has also taken concrete steps to prevent a recurrence of this behavior in the future, which they have agreed to maintain going forward. We appreciate their actions and their cooperation in our ongoing investigations.”

The firm issued opinions in connection with potentially abusive tax shelters to over 700 high-net worth individuals and corporations.

These packages had wonderfully comic names ;

1 . BOSS (Bond & Option Sale Strategy) with variants or “Son of BOSS”
2. COBRA (Currency Options Bring Reward Alternatives)
3. BLIPS (Bond Linked Issue Premium Structure)
4. COINS (Currency Option Investment Strategy)
5. FLIP (Foreign Leveraged Investment Program)
6. OPIS (Offshore Portfolio Investment Strategy)
7. POPS (Partnership Option Portfolio Securities).

The firm also issued tax opinions in connection with certain potentially abusive non-listed transactions involving distressed assets, bond and equity strips and lease strips.

Michael Garcia, the US Attorney for the Southern District of New York, released a statement on the same day announcing that it would not prosecute the Sidley Austin law firm in connection with the tax shelter promotion activities of R.J. Ruble, a partner at Brown & Wood who continued issuing shelter opinions after his firm's merger with Sidley Austin.