Deutsche Bank accused by US government of evading taxes, lawsuit filed

Deutsche Bank AG has been accused by the US government of evading taxes through underfunded shell companies. The US government has filed a lawsuit against the company asking for $190 million in taxes, penalties and interest.

In 1999 the German bank acquired a corporation that held stock whose sale would generate $100 million in taxable gains because it rose in value.

Deutsche Bank made a deal to create three shell companies: BMY Statutory Trust, BMY Acquisition Corp., and BMY Acquisition LLC.

According to the US these three companies were acting as an underfunded special-purpose vehicle “with no function other than to be stuck with a tax bill that it could never pay,”

The case is U.S. v. Deutsche Bank AG, 14-cv-09669, U.S. District Court, Southern District of New York (Manhattan).

Manhattan U.S. Attorney Preet Bharara said yesterday in a statement:

“Deutsche Bank tried to make its potential tax liabilities disappear. This was nothing more than a shell game.”

In 2010 the bank paid $554 million for helping wealthy Americans avoid taxes by using fraudulent shelters.

According to Reuters, Renee Calabro, a spokeswoman in New York for Deutsche Bank, said the company previously reached an accord related to the claims in yesterday’s lawsuit.

Calabro said in an e-mailed statement:

“We fully addressed the government’s concerns about this 14-year-old transaction in a 2009 agreement with the IRS,”

Adding:

“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.”