Haim Saban accused of tax dodge by jailed former advisorTue Jul 21, 2009 @ 01:04PM PST
By Matthew Belloni
Industry politico Haim Saban was sued in federal court by a former financial advisor who is currently in jail on felony charges of money laundering, conspiracy and identity theft, and is now claiming that Saban failed to pay proper taxes when he sold a company for $5.3 billion to Disney in 2001.
Here's the two-count complaint for declaratory relief, filed today by Marty Singer of Lavely & Singer.
Matthew Krane says he put together a tax plan that would allow Saban to avoid levies on a $1.5 billion profit from the sale of Fox Family Worldwide to Disney.
“The plan thus saved Defendants $150,000,000 or more in tax benefits while, at the same time, placing $60,000,000 in potential stock profit at Saban’s disposal,” the lawsuit claims.
Saban is a well-known industry political fundraiser for Democrats and a noted philanthropist. Much of his money comes from the sale of his Fox Family Worldwide (owned with Rupert Murdoch) to Disney.
Krane is a Hollywood lawyer and tax advisor who, as the LA Business Journal reported recently, has been in jail facing federal charges over money laundering and conspiracy in what a prosecutor has called one of the largest tax evasion schemes in U.S. history.
From the LABJ:
- At the heart of the case is a shelter that Krane used to allow his star client, Haim Saban, to evade taxes on capital gains of $1.5 billion Saban made after selling his interest in the Fox Family Channel in 2001. In surprising testimony in 2006, the media mogul told the U.S. Sentate that his limited formal education prevented him from understanding the shelter was illegal. He ended up paying $250 million in back taxes and penalties.
- That would appear to end it for Saban. But several insiders, most of whom did not want to be identified, pointed out that since a trial is in Krane’s future, it is possible – but by no means a certainty – that Saban or others could be touched by Krane’s ongoing legal troubles.
Well, consider Saban touched. Krane's beef appears to stem from claims filed by Saban against him for fraud and breach of fiduciary duty and unjust enrichment in Vienna, Austria. Saban is apparently attempting to prevent Krane from getting paid his full fee for orchestrating the complex deal, and Krane is fighting back with a very public lawsuit.
"More than seven (7) years after reaping astronomical profits from the Transaction...Saban sought to deprive Plaintiffs of the entire portion of the fee fully earned by the Plaintiffs for the work Krane performed for Saban," the complaint reads.
So now he's filed suit in Los Angeles to get a court to declare that he has "a legal
right to the compensation (he) received in connection with the Plan"
and that the Vienna action be governed by California law and
time-barred because Saban knew about potential claims in 2005 and did
nothing until 2008.
Of course, there are all sorts of other personal attacks thrown in as well, including that Saban has built his fortune "through forgery, perjury and fraud." Comments from all sides are likely forthcoming.
UPDATE: A Saban spokesperson has just issued this statement:
“Mr. Krane has been sitting in the Metropolitan Detention Center on charges of identity theft for over a year and has also recently been indicted by the U.S. Attorney in Seattle on a conspiracy count charging that Mr. Krane defrauded Mr. Saban and laundered illegal kickbacks he received in connection with recommending and brokering Mr. Saban’s investment in an illegal tax shelter. The Government has said Mr. Saban was a victim of this conspiracy and he has paid the IRS all taxes owed. Mr. Saban has brought a claim against Mr. Krane related to the fraud and his breach of fiduciary duty and Mr. Saban has been granted a preliminary injunction in his case against Mr. Krane and the illegal funds have been frozen in Austria. The frivolous claims made by Mr. Krane in this lawsuit are a transparent attempt to distract from Mr. Saban’s right to recover the money stolen from him by Mr. Krane.”