Deutsche Bank agrees to pay over $550 million to resolve tax shelter fraud case

[News_Editor]

Deutsche Bank agrees to pay over $550 million to resolve tax shelter fraud case

2010-12-22 11:34:26 GMT+7 (ICT)

MANHATTAN, NEW YORK (BNO NEWS) -- Deutsche Bank on Tuesday agreed to pay over $550 million to the United States to settle a tax shelter fraud case that caused billions of dollars in U.S. tax losses, prosecutors said.

Deutsche Bank admitted criminal wrongdoing in connection with its participation in financial transactions which caused fraudulent tax shelters. As part of the agreement, the financial institution entered into a non-prosecution agreement (NPA) with the U.S. to continue cooperating and accept the designation of an independent expert that will review the implementation of measures to ensure no future wrongdoing by Deutsche Bank.

The $553.63 million payment represents the total fees the bank earned from its participation in the tax shelter activity, the amount of taxes and interest the IRS was unable to collect from taxpayers because of the misconduct, and a civil penalty of more than $149 million Deutsche Bank is paying to settle the IRS' promoter penalty examination.

The NPA also demanded that Deutsche Bank provides a detailed Statement of Facts, setting forth its criminal conduct. In addition, the NPA prohibits Deutsche Bank's involvement with any pre-packaged tax products, which were the previously offered tax shelters.

Deutsche Bank is further required to maintain an effective compliance and ethics program that requires the government-appointment of an independent expert to ensure the efficiency of such program. Deutsche Bank also agreed to fully cooperate with the investigation, including the voluntary provision of information and documents.

The U.S. designated Bart Schwartz as the independent expert as accorded in the NPA. Schwartz, of Guidepost Solutions, will be responsible for evaluating the implementation and effectiveness of Deutsche Bank's measures.

Deutsche Bank is able to object any recommendation submitted by Schwartz, after which U.S. Attorney's Office for the Southern District of New York will analyze the appeal and determine if the recommendation in dispute is necessary.

If Deutsche Bank violates the NPA in any form, prosecutors said, the U.S. government may prosecute the financial institution or extend the tenure of the independent expert.

-- © BNO News All rights reserved 2010-12-22