* Seven accused of promoting illegal tax shelters

* U.S. says shelters generated over $7 bln in phony losses (Adds details throughout from indictment, reaction)

By Martha Graybow

NEW YORK, June 9 (Reuters) - A former chief executive of accounting firm BDO Seidman and two former employees at Deutsche Bank AG (DBKGn.DE: Quote, Profile, Research) were among seven people indicted on Tuesday on charges of promoting illegal tax shelters that generated more than $7 billion in phony losses for rich clients.

The case is part of a larger investigation by the U.S. government into unlawful tax shelters. A former BDO Seidman vice chairman, Charles Bee, pleaded guilty last week in U.S. District Court in Manhattan to tax shelter fraud, and others have also entered guilty pleas.

The new 27-count indictment was announced by the U.S. Attorney's Office in Manhattan and the Internal Revenue Service.

All seven were charged with conspiracy to defraud the IRS. Several were also charged with tax evasion and impeding the functioning of the IRS.

The defendants include Denis Field, 51, of Naples, Florida, a former CEO and chairman of BDO Seidman.

"We are disappointed that the government has seen fit to bring a criminal case here," said his lawyer, Caroline Rule. "Mr Field always believed that the transactions at issue were legitimate tax planning."