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RJ Lane sues Deutsche Bank, BDO Seidman for fraudulent tax shelter

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January 4
12:23 AM 2014

A lawsuit was filed against Deutsche Bank, BDO Seidman and a former BDO Seidman partner for claims that they created a fraudulent tax shelter that translated to losses for a former head of a Fortune 100 software firm, Bloomberg reported. Plaintiff RJ Lane lodged the case in a Chicago state court.

Bloomberg reported that the tax shelters stated in the lawsuit are similar to the ones used by Ray J. Lane, the former COO and President of Oracle Corp and former Chairman of Hewlett-Packard Co, who settled the case with the Internal Revenue Service for $100 million. The tax shelter was called POPS or Partnership Option Portfolio Securities which were utilized to protect income amounting to $250 million through what tax regulators determined were "sham" deals. RJ Lane did not name his former employer in the complaint.

In his complaint, RJ Lane said he had put his trust in Michael Kerekes, a senior tax partner at BDO Seidman who gave him advise on the POPS strategy. In 2009, Kerekes pleaded guilty to conspiracy to tax evasion and conspiracy to defraud the US. He had worked as a partner at the Los Angeles office of BDO Seidman from 1998 to 2008.

In the complaint, RJ Lane's lawyers said, "In reality, BDO, Deutsche Bank, and A&P were peddling a tax shelter that they knew was illegal and that they knew possessed no chance for profit after the subtraction of fees and costs."

In 2010, Germany-based Deutsche Bank admitted to criminal wrongdoing and agreed to a $553.6 million settlement to avoid prosecution for participating in 15 fraudulent tax shelters which included POPS. In June 2012, BDO which is now called BDO USA Llp said it would be paying $50 million settlement to take care of the tax-fraud conspiracy which aided wealthy individuals to avoid paying taxes amounting to $1.3 billion from 1997 to 2003, the report said.

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