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The Deutsche Bank Deal

December 23, 2010

Deutche Bank has settled potential charges arising out of its role in the mass marketed tax shelters of the late 1990s and early part of the last decade. The German Bank enabled many of the shelters that brought national accounting and law firms to grief. Jack Townsend explains the deal:

1. DB admits criminal wrongdoing.]
2. A payment of $553,633,153, representing DB's total fees from its participation in tax shelter activity, the tax and interest the IRS was unable to collect from the taxpayers entering those shelters, and a civil penalty of over $149 million.

3. DB provided a detailed Statement of facts admitting its tax shelter shenanigans.

4. DB must implement and maintain an effective compliance and ethics program. Incident to this commitment, DB must install a government-appointed independent expert to oversee the program. The independent expert is Bart Schwartz of Guidepost Solutions.

5. The shelters involved, with the ubiquitous, sometimes tongue in cheek, acronyms included:

a. BLIPS (involving KPMG)

b. FLIP/OPIS (involving KPMG)

c. Short Option Strategies (SOS) (involving Jenkens & Gilchrist (Daugerdas et al), KPMG,. E&Y and others.

d. PICO and POPS (involving "various accounting firms and other entities)

In hindsight, it's amazing that people thought this stuff would work, but it was hard for those of us who weren't selling "product" to convince clients that the big boys were selling snake oil.

Tags: Deutche Bank.Federal Tax Crimes blog.Jack Townsend.tax crime.tax shelters.