Tax lawyer sues to stop Saban from seizing fees

LOS ANGELES, July 21 (Reuters) - Billionaire media mogul Haim Saban was sued on Tuesday by his jailed former tax attorney, who is trying to hang on to $36 million in fees Saban paid for tax shelters that turned out to be illegal.

Matthew Gale Krane, a prominent Hollywood attorney, wants a Los Angeles court to rule that Saban cannot seize the funds through a lawsuit he filed last year in Austria, where Krane placed the money.

Saban, one of America's 300 richest people as of 2009 according to Forbes, is the chairman of privately held Spanish-language broadcaster Univision who parlayed a U.S. license for the "Mighty Morphin Power Rangers" into a media empire.

Krane, who is jailed in Los Angeles awaiting trial on federal identity theft and passport fraud charges, also was indicted last month in a separate conspiracy and tax evasion case in Seattle involving former executives of the Quellos Group investment firm, according to indictments.

Krane, a long-time financial advisor to Saban, placed $1.5 billion in profits Saban received from the 2001 sale of his 50 percent stake in the Fox Family Worldwide cable network in Quellos tax shelters that were the focus of a 2006 U.S. Senate investigation into bogus tax shelters.

Prosecutors in the Seattle case say Krane got $36 million in kickbacks from Quellos for steering Saban to the tax plan, which Senate investigators said made billions of dollars worth of fake securities trades to show losses that would offset real taxable capital gains.

Saban told the Senate committee that he had been duped by Quellos, but ended up paying the Internal Revenue Service $250 million in back taxes on his Fox Family gains.

In his lawsuit, Krane denies that the $36 million was a referral fee or kickback, and says Saban owes him the money for his financial and tax advice.

A spokeswoman for Saban could not be reached immediately for comment.

The case is Matthew Gale Krane vs. Haim Saban, Case No. BC418250, Los Angeles Superior Court. (Reporting by Gina Keating; editing by Carol Bishopric)