FRANKFURT (dpa-AFX) - The United States of America and the Deutsche Bank (DB) resolved a civil lawsuit in which the U.S. alleged 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. Pursuant to the settlement Agreement, Deutsche Bank agreed to pay the United States $95 million to resolve the claims in the complaint.
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 the transaction, Deutsche Bank entered into a fraudulent plan with a tax shelter promoter. 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 the transaction so that the shell company would have little or no assets and would be unable to pay the taxes due.
Manhattan U.S. Attorney Preet Bharara said: 'Using a web of shell companies and series of calculated transactions, Deutsche Bank sought to escape liability for tens of millions of dollars in taxes. The Government, through this action and settlement, has made Deutsche Bank admit to its actions designed to avoid taxes.'
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