Yesterday, the USAO SDNY and Deutsche Bank ("DB") announced that had agreed to a nonprosecution agreement ("NPA") requiring, among other things, the following:
1. DB admits criminal wrongdoing.
2. A payment of $553,633,153, representing DB's total fees from its participation in tax shelter activity, the tax and interest the IRS was unable to collect from the taxpayers entering those shelters, and a civil penalty of over $149 million.
3. DB provided a detailed Statement of facts admitting its tax shelter shenanigans.
4. DB must implement and maintain an effective compliance and ethics program. Incident to this commitment, DB must install a government-appointed independent expert to oversee the program. The independent expert is Bart Schwartz of Guidepost Solutions.
5. The shelters involved, with the ubiquitous, sometimes tongue in cheek, acronyms included:
a. BLIPS (involving KPMG)
b. FLIP/OPIS (involving KPMG)
c. Short Option Strategies (SOS) (involving Jenkens & Gilchrist (Daugerdas et al), KPMG,. E&Y and others.
d. PICO and POPS (involving "various accounting firms and other entities)
Obviously, with this settlement and the predicate settlements with KPMG and Jenkens & Gilchrist the Government is signaling to those players and those tempted to play in these games with deep pockets and reputations that their pockets will be lighter and their reputations tarnished.
The documents related to the settlement are:
Nonprosecution Agreement (including Statement of Facts)
USAO SDNY Press Release
DB Press Release
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