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Ex-BDO chair indicted (news & commentary); Firm battered; More
6/11/2009

News and commentary…
FORMER BDO CHAIR-CEO SNAGGED FOR TAX SHELTER SCHEME
Denis Field accomplished for his former firm, BDO Seidman, what it has generally tried to accomplish but failed, gain national media exposure. Smaller national firms always search for ways to join their Big 4 brethren getting national media attention. When it happens, however, it’s rarely for positive reasons they wish. BDO is making national news this week, along with KPMG and Ernst & Young (see below), because partners created tax shelter strategies that helped clients defraud the IRS.

Field, BDO chair-ceo from 1999 to 2003, is among seven people indicted on federal charges that they created and marketed tax shelters that generated more than $7 billion in phony losses for hundreds of wealthy clients who used the losses to offset real income and cut tax bills. Collectively, the indictment says, the seven were paid $180 million in fees for their services from 1998 to 2002. Field was paid $24.6 million for work on the shelters, prosecutors allege, and personally used the shelters to evade personal tax liabilities.

There are several differences between the KPMG and BDO situations. U.S. attorneys overplayed their hand with KPMG partners and charges were dismissed against many of their targeted professionals. The feds have taken their time preparing their assault on BDO partners and to date none has escaped prosecution or a plea deal. The major difference: The partners driving the tax shelter program at BDO were the same partners leading the firm.

In a 79-page indictment filed in New York, authorities say that Field, 58, of Naples, Fla., was part of a group that defrauded the IRS by designing, marketing, implementing and then defending bogus tax shelters from 1994 to 2004. Charged with Field was Robert...

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Bowman commentary...
It was just five, not “many” years ago, that BDO was promoting the tax shelters, according to the indictment. Partners who took orders from Field, and many more who profited from his creation, are still with BDO.

“BDO cleaned house of everyone who led the tax shelter practice,” Allan Koltin, the Chicago-based consultant who counts BDO among his clients, says. “To its credit, the firm has done a complete 180-degree in governance. It’s gone from a financial services firm back to being an accounting firm.”

Several of the profession’s insiders have long expected. Field’s indictment. When the Feds began going after partners at KPMG and E&Y, it was just a matter of time before they came after Field.

Field rose to prominence in BDO as a tax partner. His work earned respect in New York and Grand Rapids, Mich., where the firm was founded by the Seidman family. In the early 1990s he became ND-tax but, according to sources, he gained power as chair of the compensation committee. It irked Field that the firm’s average partner compensation...

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They said it...
THE CEO, NOW APPEARING ON YOUTUBE
What’s the most important leadership lesson? It’s the ability to listen, and to make people understand that you are listening to them, James Schiro, the former PricewaterhouseCoopers, says. The other most important thing is making people understand the strategy and the message, and be out in front of the people so that they actually understand the mission.

Talking with Colin Powell before PwC’s new partners meeting, Schiro asked, “Well, what do you think is the most important thing”? He said, “The most important thing is the troops have to understand where they are going.” People don’t like change, but they can manage change. They can’t handle uncertainty. I think it is the job of leaders...

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