Media mogul accused of 'fraudulent' tax strategies

Haim Saban has been sued by his former attorney, who accuses the media mogul trying to deprive him of $36 million in fees for work on a tax shelter that was later declared illegal.

In a far-reaching complaint filed Tuesday in Los Angeles Superior Court, Matthew Gale Krane also alleged Saban has engaged “perpetual fraudulent and deceptive conduct” in connection with business and tax strategies, although the exact details were not provided.

The suit, filed by attorneys Martin Singer and Michael Holtz of Lavely and Singer, stems from Krane’s work on Saban’s effort to use a tax shelter to prevent paying federal taxes on a $1.5 billion capital gain he received from his 2001 sale of his interest in Fox Family Worldwide to the Walt Disney Co. The fund was later declared an illegal shelter, and Saban paid about $250 million in back taxes, interest and penalties.

A spokesman for Saban issued a statement calling the suit “frivolous” and “a transparent attempt to distract from Mr. Saban’s right to recover the money stolen from him by Mr. Krane.”

Federal authorities in Seattle charged Krane last month with conspiring to launder money and receiving a kickback by the advisory firm Quellos Group for steering Saban to the tax shelter. He’s also been charged with passport fraud. Krane, through his attorney, has denied the charges.

Krane’s suit alleges Saban has tried to block him from getting the fees by a court action in Austria, where the money is in a bank account but is now frozen after Saban obtained a preliminary injunction. The action alleges that the $36 million Krane received was for the time he spent “creating, designing and initially researching” the shelter and that the money was not “in any way a referral fee, a finder’s fee or any kind of kickback.”

Saban, who made his first fortune as the producer of the “Mighty Morphin Power Rangers” kidvid franchise, is a major supporter of the Democratic Party.

The suit included several broad allegations against Saban without providing full details. “Now, to protect himself and to hide his secrets, including secrets that implicate major foreign policy in this country and prominent foreign officials, Saban seeks to scapegoat Krane,” the complaint said.

Saban’s statement said, “The government has said Mr. Saban was a victim of this conspiracy and he has paid the IRS all taxes owed.”

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