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Wednesday, June 12, 2024 | Back issues
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Feds Sue Deutsche Bank for $190M in Taxes

MANHATTAN (CN) - Deutsche Bank created three shell companies to cheat the tax man out of $190 million in 2001, federal prosecutors say.

The United States on Monday sued Deutsche Bank, two of its subsidiaries, three of its shell companies and Wells Fargo Bank, in Federal Court.

The lawsuit was 15 years in the making.

In 1999, Deutsche Bank acquired an unnamed corporation that "held stock with a very low cost-basis, such that the sale of this stock would trigger more than $100 million in taxable gain as a result of the appreciation in value of the stock," the 24-page complaint states.

Deutsche Bank ducked taxes on this gain by creating defendant shell companies BMY Acquisition Corp., BMY Acquisition LLC and BMY Statutory Trust, prosecutors say.

"These shell corporations collectively served as an underfunded special-purpose vehicle with no function other than to be stuck with a tax bill that it could never pay," prosecutors said in a statement.

First Union National Bank, now known as Wells Fargo, was BMY Trust's trustee at the time, prosecutors said.

U.S. Attorney Preet Bharara said in a statement that the defendants were involved in "nothing more than a shell game."

Prosecutors filed four counts for collection of 2001 taxes, actual fraudulent conveyance, constructive fraudulent conveyance and unjust enrichment.

Deutsche Bank said in a statement: "We fully addressed the government's concerns about this 14-year old transaction in a 2009 agreement with the IRS. In connection with that agreement they abandoned their theory that DB was liable for these taxes, and while it is not clear to us why we are being pursued again for the same taxes, we plan to again defend vigorously against these claims."

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