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Sunday, November 23, 2008

Attorney Indicted on 'Homer' Tax-Shelter Fraud

Indictment Links Deutsche Bank to Tax-Shelter Inquiry
The New York Times by LYNNLEY BROWNING - November 17, 2008

Federal prosecutors have indicted a lawyer trained in accounting, charging that he sold questionable tax shelters named for the lead character of the show “The Simpsons.” The lawyer indicted in the case, John B. Ohle III, was an executive at Bank One before it was acquired by JPMorgan Chase in 2004. The case may put pressure on Deutsche Bank, which has been under criminal investigation over its tax shelter work from the late 1990s through 2001. Deutsche Bank, identified in the indictment unsealed late Friday as “Bank B,” arranged the financial transactions that Mr. Ohle sold. The shelter, known as Homer, allowed wealthy clients to falsely generate bogus tax losses of nearly $430 million, and to evade taxes of $103 million, according to the indictment from prosecutors for the Southern District of New York, who are also leading the inquiry of Deutsche Bank. Mr. Ohle, who is also an accountant by training, is accused of selling 36 abusive shelters in 2001 to wealthy clients of Bank One and Jenkens & Gilchrist, a national law firm that went bankrupt in 2007 amid scrutiny of its tax shelter work. Jenkens earned $12.1 million in fees, while Bank One earned $5.2 million from the Homer shelter, according to the indictment. Mr. Ohle worked for a Bank One unit in Chicago that focused on selling aggressive tax shelters. In 2002, he left to form his own tax shelter boutique, the Dumaine Group, with former colleagues.

The indictment charges Mr. Ohle, a resident of Wilmette, Ill., and New Orleans, of multiple counts of tax evasion, conspiracy and obstruction of I.R.S. procedures. David Spears, a lawyer for Mr. Ohle, said on Sunday that his client “did not commit any crime, and we intend to defend the case vigorously at trial.” Since at least 2004, prosecutors have been examining Deutsche Bank for its role in two related, abusive tax shelters that were sold to investors and involved collaboration between banks, law firms and accounting firms. Homer and its cousin, Cobra, are both considered by the I.R.S. to be variations on one widely sold abusive tax shelter of the late 1990s, Son of Boss, itself related to Boss, or bond and options sales strategy. Cobra, which stands for “currency options bring reward alternatives,” was sold to more than 1,100 wealthy investors, while Homer, which stands for “hedge option monetization of economic remainder,” was sold to dozens of investors. The Homer and Cobra inquiries revolve around Deutsche Bank’s role in arranging what prosecutors contend are bogus trades and loans that were intended to lose money. Among the unnamed investors who bought Homers are a truck-stop owner from McComb, Miss., and the owner of an options-trading firm in Chicago, the indictment said.

3 comments:

pit bull said...

This is the tip of the iceberg...These things all started at Bankers Trust Company before Deutsche Bank bought it. Bankers Trust became a federal felon on 26 July 1999 in the S.D.N.Y....They should look at the law firms too, like White & Case...and don't forget the involvement with Enron...Is George W. Bush going to give them a pardon??? We wonder???

Anonymous said...

after all the things that All Capone did the one thing that sent him to jail was the I.R.S
The jail cells are cleaned out and ready for its new guests.

retired tax atty said...

the Congress held hearings in 2003 of the ttax shelter scam, I beleive it named Bankers Trust Company along with six named partners at the White & Case law firm. They produced some really good reports on the subject everyone would be well served to read them.

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