US: Indictment Links Deutsche Bank to Tax-Shelter Inquiry

Publisher Name: 
The New York Times

Published: November 16, 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.

AMP Section Name:Financial Services, Insurance and Banking