Two principals of defunct Seattle investment management firm Quellos Group and a Los Angeles lawyer were indicted in a tax shelter scheme that allegedly created more than $1.3 billion in fraudulent losses for prominent clients, including media mogul and billionaire investor Haim Saban.

The indictment names as defendants Los Angeles lawyer Matthew G. Krane, Quellos founder and Chief Executive Jeffrey Greenstein and Quellos principal Charles Wilk, also a lawyer. It charges the two former Quellos principals with conspiracy to defraud the Internal Revenue Service, tax evasion and money laundering, among other charges.

Krane, charged with money laundering, is accused of secretly receiving a $36-million kickback for enticing Saban, one of his long-standing Los Angeles clients, to funnel the bulk of more than $1 billion in proceeds from the sale of Fox Family Worldwide Inc. into money-losing investment vehicles, which Saban had been repeatedly assured were legal as a tax shelter.

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