Manhattan U.S. Attorney Announces $95 Million Recovery From Deutsche Bank- Income Tax Avoidance

[nitpicker]

https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-95-million-recovery-deutsche-bank-fraudulent-conveyance

Department of Justice
U.S. Attorney’s Office
Southern District of New York

FOR IMMEDIATE RELEASE
Wednesday, January 4, 2017

Manhattan U.S. Attorney Announces $95 Million Recovery From Deutsche Bank In Fraudulent Conveyance Case Related To Federal Income Tax Avoidance

Lawsuit Alleges Deutsche Bank Used

Preet Bharara, the United States Attorney for the Southern District of New York, announced a settlement between the United States of America and DEUTSCHE BANK, A.G., DB U.S. FINANCIAL MARKETS HOLDING CORP., and DEUTSCHE BANK SECURITIES, INC. (“DEUTSCHE BANK”), resolving a civil lawsuit in which the United States alleges that DEUTSCHE BANK participated in a series of transactions that amounted to fraudulent conveyances carried out with the purpose and effect of evading tens of millions of dollars in federal tax liability.
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According to the allegations of the Complaint previously filed by this Office against DEUTSCHE BANK in Manhattan federal court:

In 2000, DEUTSCHE BANK acquired a corporation that held stock with a very low cost basis, meaning that when this stock was subsequently sold, significant taxable income would be incurred. In order to dispose of the stock without paying the taxes that would be due on this transaction, DEUTSCHE BANK entered into a fraudulent plan with a tax shelter promoter. Pursuant to this plan, DEUTSCHE BANK transferred the shares of the acquired corporation to a shell company (“BMY”) created by the promoter, which then transferred the stock back to DEUTSCHE BANK in such a way as to cause the shell company to get stuck with the tax bill. DEUTSCHE BANK and the promoter structured this transaction (the “May 2000 Transaction”) so that the shell company would have little or no assets and would be unable to pay the taxes due. The net result: DEUTSCHE BANK would be able to cleanse the stock of its low cost basis and purport to leave the tax liability with a “taxpayer” – the shell company – that would be unable to pay the tax. Ultimately, this transaction left the shell company BMY with a liability of more than $52 million in taxes, plus interest and penalties.

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Pursuant to the Settlement Agreement approved today by the United States District Court for the Southern District of New York, DEUTSCHE BANK agrees to pay the United States $95 million to resolve the claims in the Complaint.
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