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Thursday, July 23, 2009

Teenage Mutant Ninja Turtle Tax Evasion

The American Lawyer: Indicted Lawyer Slaps Haim Saban With Sensational Civil Suit, by Brian Baxter:

A civil suit filed in Los Angeles Superior Court on Tuesday reads like a script for a big screen Hollywood legal thriller. It's a case of the truth being stranger -- and far more complicated -- than fiction.

Hollywood tax lawyer Matthew Krane is suing his former client, entertainment industry billionaire Haim Saban, over a $36 million fee Krane was paid for referring Saban to an investment fund run by the Quellos Group. ...

According to the nine-page complaint, Krane states that Saban "spent decades trying to avoid paying taxes on the many billions of dollars in income ...  Saban was the creator of hit TV franchises like the Teenage Mutant Ninja Turtles and the Mighty Morphin Power Rangers. ...

For the past year, Krane has been sitting in a cell at the Metropolitan Detention Center, a federal holding facility in downtown Los Angeles. He faces federal charges over money laundering, conspiracy, as well as related charges of passport fraud and identity theft in what federal prosecutors have called one of the largest tax evasion schemes in U.S. history. It's from there that he's taken up his fight against Saban. ...

Scene One in this drama is set in 2001, when Saban realized $1.5 billion in capital gains from the sale of his stake in the Fox Family Channel to Walt Disney. Saban tapped Krane -- a Harvard-educated lawyer with an exclusive Hollywood clientele ... -- to help the media mogul avoid hefty capital gains taxes. Krane had relied on a tax shelter to do this; that shelter is at the heart of the case filed against Saban.

In surprising testimony in 2006, Saban told the U.S. Senate that his limited formal education prevented him from understanding the shelter was illegal. He ended up paying $250 million in back taxes and penalties.

Michael Holtz, a partner with L.A. firm Lavely & Singer representing Krane in the civil suit against Saban, tells The Am Law Daily that Krane created a legitimate tax plan to protect at least half of Saban's capital gain from taxes. ...

In 2006 a report by a Senate subcommittee suspected Quellos of engaging in tax evasion. Last month federal prosecutors charged Krane and two former Quellos executives -- CEO Jeffrey Greenstein and in-house lawyer Charles Wilk -- with 18 counts of tax fraud for signing off on tax shelters designed to save the firm's clients millions by crafting phony securities transactions to pass off as capital losses.

http://taxprof.typepad.com/taxprof_blog/2009/07/teenage-mutant-ninja-turtles.html

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Comments

Saban did not create the Teenage Mutant Ninja Turtles franchise. After the original show was completed and The Mighty Morphin Power Rangers had been on the air for some time they obtained the rights to create a live action TMNT show similar to Power Rangers called Teenage Mutant Ninja Turtles: THe NExt Mutation (http://en.wikipedia.org/wiki/Ninja_Turtles:_The_Next_Mutation)

Posted by: Chris | Jul 28, 2009 8:12:14 AM