Matthew Krane, the former longtime tax attorney of Haim Saban, filed a lawsuit against the media mogul Tuesday over $36 million in fees related to an Isle of Man tax shelter that was declared invalid.
In the suit, which was filed in Los Angeles Superior Court by high-powered entertainment attorney Marty Singer, Krane seeks to regain control of an offshore bank account that allegedly holds $36 million he is accused of receiving as a kickback for advising Saban to illegally shelter hundreds of millions of dollars from capital gains taxes. According to court documents, Saban has blocked Krane's Austrian account with a suit in Vienna, Austria. Krane claims the money is rightfully his.
In an indictment unsealed last month by federal prosecutors in Seattle, Krane is accused of receiving a $36 million kickback for bringing Saban into a tax shelter designed to evade taxes on capital gains of $1.5 billion Saban made after selling his interest in the Fox Family Channel in 2001.
However, the tax shelter was declared invalid by the Internal Revenue Service in 2006, when Saban gave surprising testimony to the U.S. Senate saying that his limited formal education prevented him from understanding the shelter was illegal. He ended up paying $250 million in back taxes and penalties.
Krane claims the $36 million he received was for the time he spent "creating, designing and initially researching" the shelter and that the money was not "in any way a referral fee, a finder's fee or any kind of kickback."
Singer did not immediately return a call seeking comment nor did Saban's lawyer, Las Vegas attorney David Chesnoff.
Krane, a Harvard-educated attorney who was once a member of the top circle of L.A. entertainment lawyers, is in a federal holding facility in downtown Los Angeles on charges of money laundering and conspiracy in what federal prosecutors have called one of the largest tax evasion schemes in U.S. history. He is also accused of filing fake passport documents and aggravated identity theft.
Los Angles federal judge Dale Fischer has ruled Krane a flight risk. A bail hearing on his release is scheduled for July 27.
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