Two former KPMG US accountants have had their
convictions over illegal tax shelters upheld by a federal appeals
court in New York.

US media sources report that the appeal also
saw the judge throw out a $6m fine against one of the defendants,
John Larson, citing a lack of jury findings to support a fine above
$3m.

Former KPMG tax partner Robert Pfaff and
former senior tax manager Larson were convicted in December 2008 on
12 counts each of tax invasion.

The men are said to have helped clients that
earned more than $20m eliminate capital gains or regular income for
tax purposes through the use of illegal tax shelters.

In August 2005, Pfaff and Larson were two of
six former KPMG partners who were criminally indicted to the tax
shelter fraud. The former deputy chairman of the firm was also
included.

Larson received a prison sentence of 10 years
and one month and fined was $6m. Pfaff was sentenced to eight years
and one month in prison and fined $3m.

Larson’s lawyer J Ballenger said he was
disappointed with the court’s decision affirming the conviction and
was still considering options for further review.

“Of course, we’re gratified by the court’s
recognition that the fine imposed was unconstitutional,” Ballenger
said.