The Talent

March 31, 2010 11:43 AM

Ex-Arnold & Porter Partner Avoids Prison in Tax Fraud Scam

Posted by Zach Lowe

A former Arnold & Porter partner who faced five years in prison for his role in the Ernst & Young tax fraud scandal got off with probation after an emotional sentencing hearing Tuesday in Manhattan federal court, according to the New York Law Journal, an Am Law Daily sibling publication.

Peter Cinquegrani pleaded guilty in 2008 to helping construct illegal tax shelters for wealthy E&Y clients. He faced five years in prison as part of his plea deal but received credit for his extensive cooperation with prosecutors.

Arnold & Porter, where Cinquegrani worked from 1986 through 1993 and again from 1997 through 2007, paid an undisclosed fine to the IRS as part of the agency's investigation into the E&Y case, according to our prior reporting. Cinquegrani worked for the IRS as a tax attorney in between stints at Arnold & Porter. 

Three other firms have been under investigation for their role in the E&Y tax fraud scandal: Proskauer Rose, Sidley Austin, and Locke Lorde Bissell & Liddell. A fifth--Jenkens & Gilchrist--dissolved amid allegations that partner Paul Daugerdas, who was indicted last year, brought in hundreds of millions in revenue by writing opinion letters blessing tax shelters he knew to be illegal.

A former Sidley partner, Raymond "R.J." Ruble, was sentenced to six-and-a-half years in prison last year for writing hundreds of opinion letters blessing bogus tax shelters KPMG created for wealthy clients. Ruble charged $50,000 per letter, and was convicted after a jury trial. 

Cinquegrani was emotional and contrite during his sentencing Tuesday. "My desire to be a big shot, feel that I was part of the in-crowd in the tax community, overrode my conscience," he told the sentencing judge, according to the NYLJ. 

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