Posted Jul 22, 2009 05:30 pm CDT
Seeking to retain $36 million in claimed advisory fees paid in connection with a Quellos Group tax shelter that put a billionaire media mogul in hot water, a jailed California lawyer has sued his former client in the latest chapter of a convoluted investment saga that has created trouble for multiple attorneys.
Matthew Gale Krane, a prominent Hollywood attorney, contends in the Los Angeles Superior Court suit that he is entitled to the $36 million he legitimately earned for the investment counsel he provided to then-client Haim Saban, according to Reuters and the Am Law Daily.
Federal prosecutors say the $36 million paid by Quellos to Krane was a kickback for placing Saban’s $1.5 billion profit from the sale of the Fox Family Worldwide cable network in an illegal tax shelter administered by the group. And Saban, who earlier filed suit in Austria to obtain the money, which Krane deposited in an account in that country, contends in a statement provided to the law blog that Krane’s complaint is frivolous.
However, a lawyer who filed the civil suit against Saban this week on Krane’s behalf tells the Am Law Daily that the $36 million fee is legitimate.
‘My client was paid a fee from Quellos for providing input, assistance, guidance, and advice helping create part of this tax plan that Saban used for his sale of the Fox Family stock,” says partner Michael Holtz of Lavely & Singer, in Los Angeles. “This is not a situation where a client paid legal fees to a lawyer and then afterward wants their money back because they think they’re the victim of malpractice.”
Krane is being held without bail, as a flight risk, in a federal detention facility in Los Angeles, on charges including money-laundering and conspiracy. He is also the subject of a federal tax evasion investigation.
Related earlier coverage:
ABAJournal.com: “2 Lawyers Charged in $400M Tax Shelter Prosecution of Former Quellos CEO”
Los Angeles Business Journal: “Tax Shelter Leaves High-Powered Lawyer Out in Cold”
Carpetbagger (New York Times): “Feds Circle a Former Show Business Attorney, Eager to Keep Him Close”