Wrapping up a case that watchers once called the largest illegal tax shelter prosecution in the country's history, a New York federal district court sentenced two KPMG executives and one of KPMG's lawyers to prison April 2. The three were convicted of tax fraud in December.

Judge Lewis Kaplan of the Southern District of New York sentenced former KPMG senior manager John Larson to 10 years in prison and former partner Robert Pfaff to eight years for their central roles in a scheme to help clients evade paying more than $100 million in taxes. Raymond Ruble, a former partner at Brown & Wood (which became Sidley Austin), got six and a half years for vouching for the legitimacy of the shelters he knew were illegal. Prosecutors had recommended sentences for the three ranging from 15 years to more than 24 years.

According to Bloomberg, during sentencing Kaplan said the defendants' actions were “so raw, so brazen, so outrageous” that they crossed the line from bad accounting to criminality.

In 2005, prosecutors brought tax fraud charges against 17 former KPMG executives for setting up illegal tax shelters from 1996 to 2005. The high-profile case got even more headlines in 2007, when Kaplan dismissed (See this InsideCounsel news story) charges again 13 of the defendants due to prosecutorial misconduct.

KPMG settled with the federal government in 2005, paying a $456 million fine.