A federal judge has allowed an aggrieved tax shelter client to pursue a fraud lawsuit against Deutsche Bank AG and the law firm of Sidley Austin Brown & Wood.
While the courts have thrown out similar suits against Sidley Austin and others, U.S. District Court Judge Shira A. Scheindlin has ruled that a Virginia telecommunications executive can pursue his lawsuit, although not in New York, the Wall Street Journal reported. Scheindlin said the allegations of malpractice, breach of contract and breach of fiduciary duty could be refiled in Virginia. She threw out the suit's racketeering allegations.The law firm Jenkens & Gilchrist, which merged with Sidley & Austin in 2001, is also a defendant in the suit filed by William Seippel. He claims Deutsche Bank and Jenkens & Gilchrist sold him the Cobra tax strategy in 2003 knowing the Internal Revenue Service would reject it. In fact, the IRS has declared the shelter improper.
Seippel paid Jenkens & Gilchrist $338,880 and Sidley Austin $21,180 for what he thought were independent opinion letters on the tax shelter, called Currency Options Bring Reward Alternatives. The lawsuit says the letters were not independent because the lawyers worked with an accounting firm to structure the tax shelter.
Details here from accountingweb.