CONTACT US

For any general inquiries, please fill in the following contact form:

Our websites never use cookies or other technologies such as pixel tags and web beacons. We only retain personal information when the contact section of our websites is filled. To proceed and get in touch with us through this format please read our Terms & Conditions, updated to be in line with the provisions of the GDPR, and tick this box to consent in us retaining the above information for contacting purposes only.

SUBMIT

Kentucky Supreme Court says accounting giant Grant Thornton must pay $100 million

Kentucky Supreme Court says accounting giant Grant Thornton must pay $100 million

Attorney Kevin Murphy holds a copy of the $100 million judgment won by his client, William Yung and his family, from Grant Thornton over a tax strategy Judge Patricia Summe said the firm knew was fraudulent.

Accounting firm Grant Thornton must pay $100 million in damages to a Northern Kentucky hotel and casino owner for "egregious and highly reprehensible conduct," the Kentucky Supreme Court has ruled.

Grant Thornton’s Cincinnati office had marketed a tax shelter strategy to William Yung designed to transfer millions of dollars from the Cayman Islands – where Yung has holding corporations – without paying taxes.

Yung owns hotels, casinos as well as a Crestview Hills-based hospitality company, Columbia Sussex Corp., which manages hotels around the United States, including the Renaissance Cincinnati.

Grant Thornton employees marketed the complex tax shelter strategy to Columbia Sussex in 2000, according to the Supreme Court's opinion.

The strategy involved the Cayman Island corporations buying $30 million in U.S. Treasury notes, then transferring them to shareholders in the U.S. – avoiding federal taxes.

The opinion, issued Thursday, said Grant Thornton did not disclose that the firm itself believed there was a 90 percent chance the lRS would disallow it in an audit because of new regulations.

When Yung asked about the new regulations, Grant Thornton wrongly stated that the regulations actually helped its conclusion that the tax shelter was “more likely than not” valid, according to the opinion.

Grant Thornton, which is based in Chicago and has 59 offices, even suspended the sale of the tax shelter to new customers, the opinion says. But it advised Yung that his transactions would not be affected.

The high court's opinion says the tax shelter “was a product that (Grant Thornton) knew very early on would likely implode with the IRS, causing serious financial and business consequences for” Yung.

A Grant Thornton spokesman said the company is “disappointed with the most recent decision regarding this matter, which dates back almost 20 years, and is reviewing its options for appeal.”

By 2004, the IRS was auditing Yung and found that the transactions were fully taxable. Yung settled with the IRS for more than $18 million.

Yung sued Grant Thornton in Kenton County Circuit Court, and Judge Patricia Summe awarded approximately $20 million to cover liability to the IRS and nearly $1 million in fees paid to Grant Thornton. Summe imposed another $80 million in punitive damages.

Summe said the accounting firm had played a "game of audit roulette" with its tax advice to Yung.

A state appeals court later reduced the $80 million in punitive damages to $20 million. But the Supreme Court reinstated the full $80 million, saying Grant Thornton’s conduct “was egregious and highly reprehensible, and a substantial punitive damage award is warranted.”

Yung's attorney Kevin Murphy said his client “got justice today” and commended Summe, whose opinion was upheld by the high court.

"Despite a whole array of arguments asserted by the defendant and by several organizations filing amicus curiae briefs, the Kentucky Supreme Court ultimately found that Judge Summe got it right in every respect," Murphy said in a statement. "I am thrilled for the Yungs and to see that justice was served.”

Source: https://eu.cincinnati.com

MORE NEWS

Is bitcoin growing up? Regulated futures boom as investors seek a safer ride

Is bitcoin growing up? Regulated futures boom as investors seek a safer ride
LONDON (Reuters) - When bitcoin was born it was a symbol of counterculture, a rebel currency with near-anonymity and a lack of regulation. A...

CRA signs secret settlement with wealthy KPMG clients involved in offshore tax scheme

CRA signs secret settlement with wealthy KPMG clients involved in offshore tax scheme
Watchdog group accuses the Liberals of covering up the KPMG affairThe Canada Revenue Agency has once again made a secret out-of-court ...

Companies avoid £100bn in tax through 'spider's web' of offshore havens

Companies avoid £100bn in tax through 'spider's web' of offshore havens
Four of the top 10 places branded tax havens by campaign group Tax Justice Network have strong UK linksBig companies are avoiding an ...

Who's behind the blog

Who's behind the blog

SOCIAL MEDIA