Wednesday, December 22, 2010

Deutsche Bank pays for selling tax fraud schemes

Deutsche Bank AG has agreed to pay $553.6 million and admit to criminal wrongdoing to settle allegations that it helped U.S. clients avoid paying taxes by using fraudulent tax shelters.

The German bank will not be further prosecuted for its use of about 15 tax shelters, involving over 2,100 clients from 1996 through 2002, following a nonprosecution agreement with the IRS. The Wall Street Journal notes that some of the relevant tax shelters were marketed by KPMG LLP and Jenkins & Gilchrist PC, both of which have agreed to separate payments and penalties.

In the signed agreement, Deutsche Bank admitted that the transactions pertaining to the tax shelters were “intended to create the appearance of investment activity, but taxpayers were entering into these transactions for the primary purpose of avoiding taxes, as opposed to making profits on the transactions.”