Four Ernst partners are indicted

A former top Internal Revenue Service lawyer and three other Ernst & Young partners fraudulently reduced taxes for Americans making $10 million or more, an indictment unsealed Wednesday alleges.

The four current and former partners of the giant accounting firm were arrested Wednesday and charged with fraud and other crimes relating to tax shelters that were devised beginning in 1998, according to the indictment unsealed in U.S. District Court in New York.

From 1998 to 2004, the four designed, marketed and sold fraudulent tax shelters that made it appear as if customers were making investments when they actually were moving money around solely to dodge taxes, the indictment alleges.

They all pleaded not guilty.

Ernst & Young said in a statement that it had cooperated with the government from the start of the probe and that it voluntarily had changed its tax practices.

Those charged were Robert Coplan, 54, of Plano, Texas, a former branch chief in the IRS’ regulation division; Martin Nissenbaum, 51, of New York, a lawyer; Richard Shapiro, 58, of Rye Brook, N.Y., also a lawyer; and Brian Vaughn, 39, of Calhoun, La., an accountant. Nissenbaum, Coplan and Shapiro were each freed on $1-million bail. Vaughn was freed on $300,000 bail.

Nissenbaum and Shapiro are on administrative leave as Ernst partners. Vaughn is an ex-partner.