WSJ: Deutche Bank admits wrongdoing, pays $550 million to IRS

[Winehole23]

Deutsche Punished On Bogus Shelters


By CHAD BRAY (http://online.wsj.com/search/term.html?KEYWORDS=CHAD+BRAY&bylinesearch=true)

NEW YORK—Deutsche Bank (http://online.wsj.com/public/quotes/main.html?type=djn&symbol=db) AG agreed Tuesday to pay $553.6 million and admitted criminal wrongdoing to settle a long-running probe over fraudulent tax shelters that allowed clients to avoid paying billions of dollars in U.S. taxes.



Under a nonprosecution agreement with the U.S. Attorney's office in Manhattan and the Internal Revenue Service, the German bank won't be prosecuted for its participation in about 15 tax shelters involving more than 2,100 customers between 1996 and 2002, including shelters marketed by accounting firm KPMG LLP and defunct law firm Jenkens & Gilchrist PC.
"Customers used the transactions to generate more than $29 billion in bogus tax benefits, mainly losses," according to the agreement.


The $553.6 million payment represents the total fees that the bank collected during the period, the taxes and the interest the IRS was unable to collect during the period, and a civil penalty of more than $149 million.
"Deutsche Bank is pleased that this investigation, which concerned transactions that ceased more than eight years ago, has come to a resolution," the bank said in a statement.


Deutsche Bank said it previously had taken "appropriate provisions" for the full amount of the fine and it won't have an impact on current net income.
The agreement resolves an investigation that stemmed from aggressive, prepackaged tax shelters that the government believed were fraudulent.


More than a dozen people were charged criminally in the matter.



However, a federal judge threw out charges against 13 former KPMG executives in 2007 after finding prosecutors violated their rights to counsel by putting undue pressure on the accounting firm not to advance them defense costs.


A former KPMG LLP tax partner, a onetime KPMG senior tax manager and a lawyer in a case were convicted of criminal charges in 2009 in a case once billed as the largest tax-shelter fraud prosecution in U.S. history. The investigation is continuing.


KPMG itself signed a deferred prosecution agreement in which it admitted to the fraudulent sale and marketing of bogus tax shelters and agreed to pay a $456 million penalty.



A conspiracy charge against KPMG was dropped in December 2006.
The shelters at issue included so-called Blips, or bond-linked issue premium structure; Flips, or foreign leveraged-investment program; and OPIS, or offshore portfolio-investment strategy.


Jenkens & Gilchrist issued opinion letters touting the legitimacy of the transactions underlying some of the shelters and marketed some of the shelters. The firm closed its doors in 2007 after entering into an agreement avoiding prosecution and paying a $76 million IRS penalty.


Last year, criminal charges were brought against seven people related to the Jenkens & Gilchrist shelters, including three former Jenkens & Gilchrist lawyers, two former Deutsche Bank employees and the former chief executive of accounting firm BDO Seidman LLP.



Two people pleaded guilty in that case.


As part of its agreement Tuesday, Deutsche Bank agreed not to be involved with any type of prepackaged tax products and to adopt an ethics and compliance program. The bank also agreed to cooperate with prosecutors.


Under the agreement, Deutsche Bank admitted it knew or should have known that the transactions underlying the shelters were "intended to create the appearance of investment activity, but taxpayers were entering into these transactions for the primary purpose of avoiding taxes, as opposed to making profits on the transactions."


Deutsche Bank's U.S. shares ended 26 cents higher, or up 0.5%, at $52.05 in trading on the New York Stock Exchange.
http://online.wsj.com/article/SB20001424052748703581204576033761692111074.html

[boutons_deux]

But did DB turn over the list of 2000 Americans who used DB's tax evasion scheme?

no? of course not. I bet they were never even asked for it.

The Rich Are Different From You and Me. They're above the law. Wesley Snipes is in prison, why aren't these 2000 Americans using tax evasion shelters?

[Winehole23]

But did DB turn over the list of 2000 Americans who used DB's tax evasion scheme?

no? of course not. I bet they were never even asked for it. Wrong.

The $550 million settlement came a the end of the process that started with the US asking for the 2000 names. Thanks for playing.

[Winehole23]

UBS/Deutsche mini-roundup:

http://www.independent.co.uk/news/business/news/ubs-in-london-gets-drawn-into-us-tax-shelter-inquiry-503621.html


FRANKFURT/ZURICH (Reuters) – Deutsche Bank's U.S. tax fraud settlement has heightened expectations of more deals being struck as American authorities target overseas banks in a crackdown on tax dodgers (http://news.yahoo.com/s/nm/20101222/bs_nm/us_deutsche_bank#).


U.S. prosecutors are pushing ahead with more probes, emboldened after top Swiss wealth manager UBS had to hand over the details of 4,450 clients.


Leads from that case have helped investigators look at banks in Asia and the Middle East, while clients from HSBC have also been under scrutiny, lawyers have said.
"This is the end of the matter for Deutsche Bank, but this is just the second front in the same war," former U.S. Justice Department prosecutor Michael Weinstein said.
http://news.yahoo.com/s/nm/20101222/bs_nm/us_deutsche_bank

http://en.wikipedia.org/wiki/KPMG_tax_shelter_fraud

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article1867837.ece

http://www.investmentnews.com/article/20090219/FREE/902199983

http://www.walletpop.com/2009/10/30/first-taxpayer-charged-in-ubs-scandal/

[Winehole23]

Government authorities are going after three Swiss bankers suspected of stashing over a billion dollars out of reach of the U.S. Internal Revenue Service.http://www.theatlanticwire.com/business/2012/01/irs-swiss-banker-arrests-everyones-been-waiting/46926/#.TwOS6HwxWH0.email

[Winehole23]

http://www.spurstalk.com/forums/showthread.php?t=133663

[Winehole23]

http://www.spurstalk.com/forums/showthread.php?t=130205

[Winehole23]

http://www.spurstalk.com/forums/showthread.php?t=117418

[TeyshaBlue]

lol boutons

[boutons_deux]

so did the IRS actually get 2000 names from Germany and the 50K names from Switzerland?

Any tax evaders gone/going to jail or even fined?

[Winehole23]

there was a settlement. good grasp of the obvious there.

[boutons_deux]

did US taxpayers get jailed or fined for tax evasion?

The Euro frauders got dinged, but what about the US tax evaders?

[Winehole23]

new charges might mean new discovery. the journey of legal accountability appears to be far from over.

[Winehole23]

sure, some of the little fish probably went free. thems the breaks.

[Wild Cobra]

so did the IRS actually get 2000 names from Germany and the 50K names from Switzerland?

Any tax evaders gone/going to jail or even fined?
I don't know if this applies to what you refer to, but I do remember their being a grace period and amnesty of charges for those who came clean.

[Winehole23]

should be easy to substantiate, if true.

link?

[Wild Cobra]

should be easy to substantiate, if true.

link?
Me?

I just brought up something I remember hearing in the past. Again, I don't know if it applies to the situation under discussion. I don't care enough to look. I brought it up so others can search if they are interested.

[Winehole23]

we should just take your word for it, then. no problem. i'm sure you'll do others the same courtesy when they fail to verify things they say they remember.

[boutons_deux]

The IRS has said 30,000 U.S. taxpayers with offshore accounts avoided prosecution since 2009 by entering a limited amnesty program, paying back taxes and saying who helped them hide their accounts from authorities.

http://www.businessweek.com/news/2011-10-12/offshore-tax-scorecard-ubs-credit-suisse-hsbc-julius-baer.html

[Winehole23]

boutons got your back, WC

[boutons_deux]

Wesley doesn't pay taxes and goes to jail

http://articles.cnn.com/2010-12-09/entertainment/snipes.jail_1_tax-returns-charges-of-tax-fraud-tax-protesters?_s=PM:SHOWBIZ

How are these 30K or 50K tax evaders different? And how about a govt website to plaster their names on Internet the way Snipes was?

[boutons_deux]

IRS reviving program seeking offshore tax cheats

The Internal Revenue Service is reviving a program that lets Americans hiding their money abroad pay back taxes and penalties while avoiding criminal prosecution, an effort that in recent years has netted the government billions of dollars.

IRS Commissioner Douglas Shulman, who announced the program's renewal Monday, said previous efforts in 2009 and 2011 resulted in the collection so far of $4.4 billion from 33,000 people, an amount he said "we never thought we'd reach." He said the government could reap several times that amount from the newest initiative plus people deciding against stashing their assets overseas in the first place.

"If we catch people before they come in voluntarily, it's going to be a much worse outcome for the taxpayer,

http://mobile.sfgate.com/sfchron/db_41688/contentdetail.htm?contentguid=UT3Yapsd&full=true#display

[Winehole23]

Meanwhile, the US Securities and Exchange Commission is also investigating Deutsche Bank, SPIEGEL reports. According to financial regulatory sources, the bank launched one CDO transaction called "START" in which it allegedly allowed the hedge fund of US speculator John Paulson to choose junk mortgage securities against which he could speculate -- without the other investors knowing about it.
Goldman Sachs settled a suit with the SEC in a similar case for $550 million, SPIEGEL reported.
http://www.spiegel.de/international/business/0,1518,812212,00.html

[Winehole23]

Why is there probably less here than meets the eye? For this investigation to be taken seriously, SEC enforcement chief Robert Khuzami would have to resign. He was the general counsel for the fixed income area at the time when the deals in question were undertaken (contra Der Spiegel, START was a program of synthetic CDOs, not just a single deal, just the Goldman Abacus trade that was the focus of an SEC lawsuit was actually just one of 25 Abacus trades). It would not be sufficient for Khuzami to recuse himself from this investigation. Staff would still be concerned about how the probe might affect their ultimate boss.
In addition, the fact that Paulson approached Deutsche Bank has been in the public domain since October 2009, when Greg Zuckerman’s book, The Greatest Trade Ever, was released. It discussed in detail how Paulson approached Goldman, Deutsche Bank, and Bear Stearns about constructing synthetic CDOs so Paulson could bet against the subprime market cheaply. This is how Scott Eichel, a senior Bear Stearns trader, saw it:

“We had three meetings with John, we were working on a trade together,” says Eichel. “He had a bearish view and was very open about what he wanted to do, he was more up front than most of them.
“But it didn’t pass the ethics standards; it was a reputation issue, and it didn’t pass our moral compass. We didn’t think we should sell deals that someone was shorting on the other side,” Eichel says.
http://www.nakedcapitalism.com/2012/01/so-why-hasnt-sec-enforcement-chief-robert-khuzami-resigned-sec-only-now-investigating-cdos-created-on-his-watch-at-deutsche-bank.html

[boutons_deux]

"a senior Bear Stearns trader ..... it didn’t pass our moral compass"

:lol :lol :lol :lol

[Winehole23]

It is seemly to feign sentiments of morality if they are not actually present. Classic case of hypocrisy developing as a tribute of vice, to virtue.

Still, it's hardly unbelievable to me that Bear Stearns traders had moral sensibilities and "smell tests" in 2007, and that the proposed Paulson trade didn't pass.

[boutons_deux]

Wall St, moral/ethical compass?

:lol :lol :lol :lol

If they didn't do the Paulsen deal, was not in their best intere$t, not because of any pangs of conscience.

[Winehole23]

both can be true at the same time, or one because of the other

[Winehole23]

SEC colluded with banks to minimize their CDO exposure:


Back in 2011, I asked (http://blogs.reuters.com/felix-salmon/2011/10/20/is-the-sec-colluding-with-banks-on-cdo-prosecutions/) whether the SEC was colluding with banks on CDO prosecutions. And now, thanks to an American Lawyer Freedom of Information Request, we have the answer: yes, they were (http://www.americanlawyer.com/id=1202650075059/The+SECs+Internal+Battles+over+Goldman+Sachs+Probe %3Fmcode=0&curindex=0&curpage=ALL).


This comes as little surprise: it beggared belief, after all, that every bank would end up being prosecuted for one and only one CDO. But now we have chapter and verse: the key precedent, it seems, was the first one, Goldman Sachs.



The SEC filed its case against Goldman and Tourre on April 16, 2010. Three days later Goldman reached out with a $500 million settlement offer, according to an email that Reisner sent Khuzami. Although that proposal was close to the final payment, it took another three months to announce a settlement. As Khuzami described to Kotz, Goldman wanted a global settlement that resolved not just the Abacus investigation but the SEC’s probes into roughly a dozen other Goldman CDOs.


Khuzami didn’t want to give Goldman that public victory. When the SEC and Goldman announced on July 16, 2010, that the investment bank would settle the Abac*us case for $550 million, the SEC said in a press release that the settlement “does not settle any other past, current or future SEC investigations against the firm.”


Khuzami was determined that Goldman’s payment only be linked to ABACUS. “This was not a $550 million settlement for 11 cases,” Khuzami told Kotz. “We may tell Goldman that we are concluding our investigations in these other matters without recommending charges, but that doesn’t mean we’re settling them. And that was an important point for us, because we didn’t want them out there saying, you know, they settled 12 CDO investigations for an average of $30 million each, and, you know, didn’t [Goldman] get a great deal.”


Yet in its statement on the Abacus settlement at the time, Goldman said that the SEC had concluded a review of other CDOs and did not anticipate recommending claims for now.


It’s quite impressive how quickly and accurately Goldman nailed the amount of money that it would have to pay the SEC to settle the case: when it took three months to come to the $550 million settlement, I for one assumed that Goldman had to be dragged kicking and screaming to that point. In fact, however, Goldman was happy to offer half a billion dollars right off the bat. The tough part of the negotiation was not over the Abacus fine — it was over the question of whether the SEC, with the Abacus prosecution successfully under its belt, would then go after Goldman for a dozen other deals which were functionally equivalent.


The answer was a clear no: Goldman might be equally culpable for 11 other deals, but the SEC quietly assured Goldman — but not the public at large — that none of those deals would result in any charges.


And with the Goldman deal now public knowledge, we can assume that the same nod-and-a-wink deal was struck with all the other one-and-only-one CDO bank prosecutions (http://www.sec.gov/spotlight/enf-actions-fc.shtml): Citigroup, JP Morgan, Merrill Lynch (which evidently included Bank of America), Mizuho Securities, Wachovia, Wells Fargo, UBS. Add them all up, and I wouldn’t be surprised if there are 100 unprosecuted CDO deals out there, all of whom had victims just as deserving as the ones who got paid out on the prosecuted deals. Basically, there’s a CDO lottery, and, thanks to the way in which the SEC cozied up to the big banks, the average CDO investor has a very small chance of having won it.

http://blogs.reuters.com/felix-salmon/2014/04/09/yes-the-sec-was-colluding-with-banks-on-cdo-prosecutions/

[Winehole23]

more shenanigans from 2008:


To at least one member of the committee, the possibilities of Faissola’s trade seemed wondrous. “This is fantastic,” said Jeremy Bailey, Deutsche’s European chairman of global banking, according to testimony of an executive who later recounted the exchange for an internal disciplinary panel. “You can book a [profit] in front and spread losses over time?” Bailey added. “We should do it for Deutsche Bank.”

Ivor Dunbar, the meeting’s chairman, curbed Bailey’s enthusiasm. “We are not discussing [our] balance sheet here,” he said. (Bailey, through a spokesman, denies he made the remarks.)

https://www.bloomberg.com/news/features/2017-01-19/how-deutsche-bank-made-367-million-disappear

[Winehole23]

Eight years after the financial crisis, the stakes could hardly be higher. Being the biggest bank in Germany makes Deutsche the most important bank in Europe, and the Paschi trial is an uncomfortable reminder that its operations, already with barely enough capital to meet industry standards, are threatened by persistent scandal. Deutsche is also facing investigations into whether it helped clients launder billions out of Russia. This month the bank agreed to pay $7.2 billion to resolve a U.S. probe into its subprime mortgage business, admitting it misled investors. Deutsche has paid more than $9 billion in further fines and settlements related to claims of tax evasion; violating sanctions against Iran, Libya, Syria, Myanmar, and Sudan; rigging the $300 trillion Libor market; and other alleged breaches of the law.

[Winehole23]

The German financial-markets regulator, known as BaFin, already tried to get to the bottom of the matter, commissioning an independent audit in January 2014.

The ensuing report has never been made public, but Bloomberg Businessweek obtained a copy. It shows that auditors asked Faissola what happened that afternoon in London. Other participants recalled details and dialogue, the report says, but Faissola drew a blank about the event he’d helped run. Broeksmit wasn’t interviewed. On Jan. 26, 2014, the day before the audit began, his body was found at his London home, hanging from a dog leash.

[Winehole23]

Among the casualties was David Rossi, Paschi’s communications chief. At about 9 p.m. on March 6, a bank employee noticed that Rossi was missing from his fourth-floor office. A window had been left open. Authorities found Rossi’s body in a courtyard below. Rossi, 51, wasn’t himself the subject of any inquiries, but his home had been searched two weeks earlier by police. His death was at first ruled a suicide, but the inquest has been reopened based on evidence his wife presented, including security video that shows Rossi fell out backward.

[Winehole23]

Deutsche Bank has an $82B hole in its books from decade-old derivatives trades:

http://www.ifre.com/deutsche-bank-has-a-60bn-problem-but-doesnt-want-to-talk-about-it/21337873.fullarticle

[boutons_deux]

Deutsche Bank has an $82B hole in its books from decade-old derivatives trades:

http://www.ifre.com/deutsche-bank-has-a-60bn-problem-but-doesnt-want-to-talk-about-it/21337873.fullarticle

I remember when DB basically owned Germany, a unassailable, unquestionable bedrock of the entire German economy.

Rot starts at the top. Who was he? Who were they?

[Winehole23]

Deutche Bank stocks fall 7% in one day, CoCo bonds plunge:


Shares of Deutsche Bank fell 7.2% today in Frankfurt to €9.16, the lowest since they started trading on the Xetra exchange in 1992. They’re now lower than they’d been during its last crisis in 2016. And they’re down 71% from April 2015.


This came after leaked double-whammy revelations the morning: One reported by the Financial Times (https://www.ft.com/content/5be91bca-634b-11e8-90c2-9563a0613e56), that the FDIC had put Deutsche Bank’s US operations on its infamous “Problem Bank List”; and the other one, reported by the Wall Street Journal (https://www.wsj.com/articles/deutsche-banks-u-s-operations-deemed-troubled-by-fed-1527768310), that the Fed, as main bank regulator, had walloped the bank last year with a “troubled condition” designation, one of the lowest rankings on its five-level scoring system.
https://wolfstreet.com/2018/05/31/deutsche-banks-coco-bonds-are-at-it-again-shares-plunge-to-record-low/

[boutons_deux]

ANZ, Deutsche Bank and Citigroup face 'criminal cartel' charges

http://www.bbc.com/news/world-australia-44326034

[Winehole23]

some rob you with a six gun, some with a fountain pen

[boutons_deux]

"some rob you with a six gun, some with a fountain pen"

means toys shooting blanks compared to a computer

Hackers Steal Up to $1 Billion From 100 Banks Worldwide (https://www.nbcnews.com/nightly-news/video/hackers-steal-up-to--1-billion-from-100-banks-worldwide-400146499798)
https://www.nbcnews.com/nightly-news/video/hackers-steal-up-to--1-billion-from-100-banks-worldwide-400146499798

[RandomGuy]

Deutche Bank stocks fall 7% in one day, CoCo bonds plunge:

https://wolfstreet.com/2018/05/31/deutsche-banks-coco-bonds-are-at-it-again-shares-plunge-to-record-low/

Dang. "troubled condition" is dry burocrat wording for "ate the fuck up"

[Winehole23]

Deutche Bank raided by German prosecutors.


In the trading scheme being investigated on Tuesday, known as "cum-ex" or dividend stripping, banks and investors would swiftly trade shares of companies around their dividend payout day, blurring stock ownership and allowing multiple parties to falsely reclaim tax rebates on dividends.



The loophole, now closed, has also snowballed into a political scandal, forcing testimony earlier this year from German Chancellor Olaf Scholz.



The probe has long taken on vast dimensions. Government officials say it involves some 100 banks on four continents and at least 1,000 suspects.

https://money.usnews.com/investing/news/articles/2022-10-18/german-prosecutors-search-deutsche-bank-hq-in-cum-ex-probe