(Bloomberg) Deutsche Bank AG agreed to pay $95 million to settle U.S. claims it used underfunded shell companies to evade taxes, the second time since 2010 that it resolved a government tax case.
The U.S. sued the bank in 2014 after its 1999 purchase of a company that held stock whose sale would trigger more than $100 million in taxable gains. The government sought $190 million, claiming the bank structured a deal with shell companies to avoid paying the taxes.
“We are pleased to resolve this claim and put these events from more than 16 years ago behind us,” spokeswoman Amanda Williams said in an e-mail Wednesday.
The settlement comes as Deutsche Bank and other lenders seek to wrap up legal issues before President-elect Donald Trump takes office. Last month, the German bank agreed to pay $7.2 billion to resolve a U.S. probe into its sale of the toxic debt that fueled the financial crisis, and Credit Suisse Group AG agreed to pay $5.3 billion. Deutsche Bank is Trump’s biggest lender, owning about half of the billionaire’s outstanding debt in loans tied to his hotel in Washington and Doral, a Miami golf resort.
In a separate case in 2010, Deutsche Bank admitted criminal wrongdoing and agreed to pay $553.6 million to avoid prosecution in the U.S. over fraudulent tax shelters that generated $29 billion in bogus losses. The U.S. agreed it wouldn’t prosecute the bank for fraud or tax evasion for enabling wealthy U.S. citizens to avoid $5.9 billion in taxes.
That settlement included a $149 million civil penalty, the fees that Deutsche Bank generated from the shelters, and the taxes and penalties the Internal Revenue Service was unable to collect from taxpayers because of the misconduct, according to the agreement.
In the latest case, a shell company served as an underfunded special-purpose vehicle “with no function other than to be stuck with a tax bill that it could never pay,” according to court papers. Both cases were brought by U.S. Attorney Preet Bharara in New York.
The new case is U.S. v. Deutsche Bank AG, 14-cv-09669, U.S. District Court, Southern District of New York (Manhattan).
– Bob Van Voris and David Voreacos, Bloomberg News