US Federal prosecutors have widened a criminal case involving tax shelters sold by accountant Ernst & Young, adding more fraud charges against four defendants who were first accused in May 2007 and bringing fresh charges against two external defendants. According to the New York Times, the four E&Y defendants – Richard Shapiro, Robert Coplan, Martin Nissenbaum and Brian Vaughn – participated in a scheme between 1998 and 2006 to defraud the IRS by designing, marketing, implementing and defending tax shelters aimed at helping people who earned taxable incomes of more than $10 million avoid or reduce income taxes. The new indictment, filed in US District Court in Manhattan, accuses David Smith, a lawyer and accountant based in San Francisco, of introducing a tax shelter known as CDS – contingent deferred swap – to the E&Y defendants through his company, Private Capital Management Group. E&Y then sold the CDS shelter to wealthy investor clients. By 2000, Smith had licensed the CDS shelter and variations to Charles Bolton, an investment advisor based in Memphis, and his firms, Bolton Financial Services and Bolton Capital Planning. Mr Bolton said he intended to "fight these baseless accusations".