Haim Saban, the billionaire media mogul and prominent Democrat, is being sued by his former tax attorney for an alleged multimillion-dollar tax dodge. The suit was filed Tuesday in L.A. Superior Court by Matthew Krane, a once prominent Hollywood lawyer who now sits in jail awaiting trial for money laundering, passport fraud and/or identity theft, according to various sources. Krane is accusing Saban of instructing him to create a tax shelter that would save $150 million in tax benefits from the $5.3 billion sale of Fox Family Worldwide to The Walt Disney Company in 2001.
According to The Wrap, “the alleged tax shelter was based on the Isle of Man and involved investing in losing stocks.” Saban’s spokesperson has called the lawsuit “frivolous” citing the whole thing is a revenge ploy by Krane who is upset over a $36 million dispute. Allegedly Krane’s profit from the shelter, Saban had the money frozen by an Austrian court. And, according to the New York Times, Krane’s lawsuit also accuses Saban, who is a leading Democratic fundraiser, of “secret foreign-policy dealings, demands for special treatment in return for political donations and what it called ‘perpetual fraudulent and deceptive conduct’ in business and tax strategies.”
Back in 2006, a Senate subcommittee investigated the tax shelter (report here) and left Saban alone. Based on Krane’s own legal track record, what exactly does he plan to do with $36 million from jail?
So much for client/attorney privilege.
UPDATE: A spokesperson from Saban’s crisis management firm just emailed the following 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.”
I did get the “frivolous” part right.