Yes, but KPMG was willing to pay $456 million in fines for services it acknowledges charging only $115 in revenue for. KPMG obviously was not comfortable with its position if it was willing to walk away losing that much money on the concepts.
As I understand it, KPMG agreed to the settlement to avoid indictment, which is tantamount to a death sentence for a CPA firm. In other words, contrary to the rights guaranteed in the bill of rights to due process and a jury trial by your peers, the government held a gun to the firm's head and said "your money or your life." That this could happen in a liberal democracy is a travesty.
You may recall that the government indicted Arthur Andersen a few years ago and the firm promptly failed. Although the government secured a conviction, the Supreme Court overturned it. So, bottom line: Arthur Andersen committed no crime, but was snuffed by the government.
Now you understand why KPMG could not fight but had to knuckle under, no matter how onerous the terms dictated by the government.
Power corrupts.
I am an Andersen alumnus so I had more than a casual interest in the demise of the company. Many of my friends suffered severe financial setbacks as a result of Andersen's collapse. That being said, I am not sure whether KPMG faced the same sanctions from the SEC as Andersen since the indictment of KPMG would have centered around the promotion of abusive tax shelters while Andersen's indictment was directed at its audit practices. Andersen's audit practice had already been sanctioned by the SEC, and it had consented to losing its ability to audit publicly traded companies if indicted.
I recognize the coercive ability the government has, and the justified fears of KPMG. However, I also know enough about tax shelters to retain some skepticism about KPMG's conduct in the matter.