The US Attorney's Office in New York has made an agreement with Deutsche Bank that will allow the bank to avoid criminal prosecution. Deutsche Bank will pay $553 million and admit to criminal wrongdoing. The bank had been under investigation for offering tax shelters that prosecutors say generated billions of dollars in bogus tax benefits.
Prosecutors said that Deutsche Bank made thousands of financial transactions that helped around 2100 wealthy American clients report phony tax losses amounting to nearly thirty billion dollars. Orange County tax attorneys noted that the transactions took place between 1996 and 2002.
An earlier investigation into the accounting firm KPMG led investigators to Deutsche Bank. KPMG marketed the tax shelters.
The fine that Deutsche Bank will pay was put together by figuring the fees the bank collected for the tax shelter scheme, the lost taxes and interest that the IRS would not be able to collect, plus a penalty of around $150 million, for a total of $553 million.
Lawyers for Deutsche Bank were getting edgy about a coming trial of two former DB employees, David Parse and Raymond Craig Brubaker. They were indicted for fraud and conspiracy in 2009 for their role in selling tax shelters. DB was motivated to settle before the Parse and Brubaker trial.
This settlement is the latest in series of actions against banks that offered offshore bank accounts that served tax evaders. Swiss bank UBS agreed last year to pay $780 million to settle charges that it helped wealthy Americans dodge federal taxes from 2000 to 2007.
In its tax shelter scheme, Deutche bank created transactions that generated seemingly legitimate losses for the bank's clients. But the financial deals were a sham, "intended to create the appearance of investment activity."
Source: New York Times Dealb%k "Deutsche Makes Deal In Tax Case" 12/21/2010