Business of Law

Former Manatt Phelps Partner Is Sued by DOJ in Tax-Shelter Case

Updated: A Southern California lawyer who formerly was a partner at Manatt Phelps & Phillips has been named as a defendant in a civil suit over allegedly abusive “intermediary transaction” tax shelters. It was filed by the U.S. Department of Justice in federal court in Camden, N.J.

Charles Klink and two other defendants allegedly purchased closely held companies, promising to pay the capital gains tax due after the transaction closed. Then they allegedly used a structure known as a distressed asset trust to avoid capital gains tax payment, explains a press release issued today by the DOJ’s Tax Division.

Another defendant, Caleb Grodsky, is also a California attorney who formerly worked with Klink at Manatt, reports the National Law Journal in an article reprinted in New York Lawyer (reg. req.).

Neither of the lawyers returned the legal publication’s calls seeking comment.

Related coverage: “DOJ Sues Ex-Seyfarth Partner for Alleged Sham Tax Shelters”

Updated on Feb. 24 to include and accord with National Law Journal coverage.

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