LOS ANGELES LAWYER PLEADS GUILTY TO PASSPORT FRAUD AND TAX EVASION IN CONNECTION WITH KICKBACK SCHEME
Defendant Failed to Report More than $35 Million in Income Hidden Overseas
MATTHEW G. KRANE, 55, of Los Angeles, California, pleaded guilty today in U.S. District Court in Seattle to Tax Evasion and False Statement in a Passport Application. KRANE was indicted along with the former Chief Executive Officer of Quellos Group L.L.C. (“Quellos”) and an attorney and principal of the investment firm in June 2009. The case against CEO Jeffrey I. Greenstein, 47, of Mercer Island, Washington, and attorney Charles H. Wilk, 51, of Seattle involves an illegal tax avoidance scheme using overseas accounts. Under the terms of the plea agreement entered today, KRANE will serve up to five years in prison for his two convictions. U.S. District Judge Ricardo S. Martinez scheduled the sentencing for March 2010. Trial for Wilk and Greenstein is scheduled for September 2010.
According to the indictment, Greenstein and Wilk allegedly provided kickbacks to KRANE in exchange for his assistance in enrolling a wealthy client in the tax shelter scheme. The client had more than $1 billion in capital gains in 2001, and Greenstein and Wilk promised KRANE a cut of the fees. The client was never informed of the kickback arrangement. Between March 2001, and October 2001, the men drafted false fee agreements that made it appear that the wealthy client was paying $46 million to Quellos to participate in the tax shelter strategy. In fact, nearly $36 million of that fee was actually diverted by Wilk and Greenstein to an offshore account controlled by KRANE. In his plea agreement, KRANE admits he failed to pay taxes on the income.
Additionally, KRANE admitted today that in February 2008, he applied for a passport in a false name, using false personal information such as a false Social Security Number and California Driver’s License number. At the time he attempted to obtain the false identity, KRANE was aware of the investigation into the Quellos tax avoidance scheme.
The case is being investigated by the Internal Revenue Service Criminal Investigation (IRS-CI).
The case is being prosecuted by First Assistant United States Attorney Mark Bartlett and Assistant United States Attorney Katheryn Kim Frierson.
For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, at (206) 553-4110 or Emily.Langlie@USDOJ.Gov.