HAMDEN, Connecticut, June 15 (Reuters) - U.S. prosecutors filed on Wednesday an expected civil lawsuit against Deutsche Bank (DBKGn.DE) that formalizes the $553 million fine the German bank agreed to pay last December in connection with its illegal tax shelter work for wealthy Americans.
The filing, in Federal District Court in Manhattan, is a procedural piece of the non-prosecution agreement reached last December between prosecutors and Germany’s largest bank over its work in selling questionable tax shelters.
The lawsuit, necessary under forfeiture rules, thus does not represent a new legal action against the bank, which admitted to helping 2,100 U.S. clients evade taxes over 1996 to 2002.
The tax shelters, for which Deutsche Bank created bogus losses, helped wealthy Americans evade more than $29 billion in taxes, according to Justice Department records.
Under the settlement, Deutsche Bank admitted to criminal wrongdoing and agreed to pay the fine, which it has already done. It also agreed not to contest what it knew would be a future civil lawsuit filed in connection with the fine.
The lawsuit is a capstone to one of the largest criminal tax investigations in U.S. history involving the web of banks, lawyers, accountants and brokers who made and sold bogus tax shelters to scores of Americans. In 2009, UBS (UBS.N) UBSN.VX, the Swiss bank, agreed to pay $780 million to settle charges that it helped wealthy Americans dodge federal taxes over 2000 to 2007.
John Gallagher, a spokesman for Deutsche Bank, declined on Wednesday to comment.
Prosecutors filed the lawsuit around three weeks after a high-profile criminal trial of around half a dozen senior bankers, lawyers and accountants, all from various firms, who worked at or with Deutsche Bank to create and market the shelters.
One of the bankers on trial, David Parse, a former broker for Deutsche Bank, was convicted and faces sentencing on Oct. 14. Also convicted was Paul M. Daugerdas, 60, the former head of the Chicago office of the Jenkens & Gilchrist law firm and its tax practice.
Prosecutors chose to file the complaint against Deutsche Bank after the trial so as not to prejudice its outcome, given the bank’s admissions of criminal wrongdoing last December.
Deutsche Bank admitted that as part of its tax shelter deals, it had created transactions that generated seemingly legitimate losses for clients. But the deals were in fact a sham “intended to create the appearance of investment activity;” and helped taxpayers “evade the payment of several billion dollars in federal income taxes,” according to court records.
Under the terms of its non-prosecution agreement, Deutsche Bank must continue to cooperate with prosecutors and has installed an independent expert to oversee compliance.