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Deutsche Bank Fails to Win Dismissal of Suit over Tax Fraud

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Failure to win dismissal of a U.S. government lawsuit has added to the legal troubles of Deutsche Bank AGDB . The lawsuit, filed in Dec 2014, claims more than $190 million from the bank over accusations of tax fraud 15 years back.

According a Reuters report, on Thursday the German banking giant was ordered to face the lawsuit as U.S. District Judge Lewis Kaplan turned down Deutsche Bank. The bank had argued that the U.S. government has taken too long to sue and failed to present claims with sufficient legal standing.

In 1999, Deutsche Bank had acquired a company that held three million shares of Bristol-Myers Squibb. The lawsuit claims that the shares of Bristol-Myers appreciated in value and to avoid paying several million dollars in capital gain taxes when those shares were sold in 2000, the bank set up a scheme to evade tax liability.

Preet Bharara, the U.S. Attorney alleged in the lawsuit that Deutsche Bank used three underfunded shell companies to dodge major tax liabilities in the U.S. Further, he accused these companies of being involved in fraudulent transfers, which helped Deutsche Bank evade taxes and leave the U.S. Treasury with a "significant, uncollectable tax bill".

Deutsche Bank earlier claimed that the concerned tax dispute was resolved with the Internal Revenue Service in 2009.

In connection with the latest court order, Renee Calabro, a Deutsche Bank spokeswoman stated, "We plan to continue to vigorously defend ourselves against these allegations."

The order comes amid a time when Deutsche Bank's new co-chief executive officer, John Cryan, is expediting efforts to revamp the bank and boost profitability. In a Jul 1 memo, Cryan pressed for the need of simplifying the bank's business model, reducing costs and pulling back unprofitable businesses. While the company's financials are expected to be exposed to higher legal expenses in the near term, Cryan stated that he remains focused on resolving the issues.

Deutsche Bank currently carries a Zacks Rank 2 (Buy). Some other favorably ranked stocks in the foreign banks space include Mitsubishi UFJ Financial Group, Inc. MTU , Mizuho Financial Group, Inc. MFG and UBS Group AG UBS . All these stocks carry the same rank Deutsche Bank.

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UBS GROUP AG (UBS): Free Stock Analysis Report

DEUTSCHE BK AG (DB): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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