Saturday, December 12, 2009

Bizarre Plea in Quellos - Plea Not Surprising but Facts Are Bizarre

Matthew Krane, a tax attorney, who took a large, very large kickback on a large, very large client investment in an allegedly abusive / criminal Quellos tax shelter has pled guilty. The announcement from USAO EDWA is here and a article with more of the background than in the USAO announcement is here. I do not have a copy of the plea agreement so some information provided in this blog is incomplete and may be updated when and if I get the plea agreement.

I previously blogged the larger indictment of Krane and two others involved with Quellos here.

The gravamen of the claim against Krane, a tax attorney is that he received a kickback, perhaps shared with the two other defendants, of some 35 million + on the sale of the shelter designed to shield over $1 billion in gain realized by one of his clients. Quellos and its principals designed the shelter. Krane did not advise his client of the kickback.

The guts of this news is as follows:

1. As to Krane, the plea is to "Tax Evasion and False Statement in a Passport Application." The announcement says: "KRANE will serve up to five years in prison for his two convictions." (As an aside, it is unclear why Krane will serve only up to 5 years; given the amounts the tax evasion plea generates a Guideline sentence of; I have not seen the calculation that would make the Passport conviction moot in terms of sentencing.)

2. As to the remaining defendants (Wilk and Greenstein), Krane will assist the Government in making its case. May not be a pretty picture for them. The trial is tentatively scheduled for September 2010.

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