Global Fastener News

Arrow Fasteners Chief Sues for $23 Million Fraud

Jason Sandefur

The founding family of New Jersey manufacturer Arrow Fasteners Co. has sued embattled accounting giant KPMG, accusing the firm of selling fraudulent tax shelters that lost the Abrams family millions of dollars, The Record newspaper reports. The lawsuit claims KPMG advised the Abrams family to pay $23 million for a shelter designed to create paper losses that would reduce their taxes, including those on income from the sale of Arrow in 1999. Instead, the IRS disallowed the shelter and audited the family and trusts, which incurred “tens of millions of dollars in tax liabilities.”
The suit was filed just days before the Justice Department indicted eight former KPMG executives on fraud charges. While escaping criminal complaint, the accounting firm admitted to wrongdoing and agreed to pay a $456 million fine.
Court records state the Abrams’ shelter was designed to enable the family and trusts to show a loss of $330 million through a series of financial maneuvers involving several specially-created limited liability companies. Arrow president Allan Abrams and his wife Elaine, along with sister Isabel and her husband, former Arrow VP Barry Knispel, filed the suit. The Abrams family and trusts have since paid the IRS penalties of hundreds of thousands of dollars, the suit says.
Michigan-based Masco Corp. bought Arrow in 1999. Morris Abrams founded Arrow in 1929. �2005 FastenerNews.com