Metropolitan News-Enterprise


Monday, June 13, 2011


Page 4


Suspended Los Angeles Attorney Sentenced to Prison for Tax Fraud


By a MetNews Staff WriterBy a MetNews Staff Writer


Suspended Los Angeles attorney Matthew G. Krane was sentenced Friday to 32 months in prison and two years of supervised release for his role in a fraudulent tax shelter scheme, IRS officials said.

U.S. District Judge Ricardo S. Martinez of the Western District of Washington also ordered Krane to forfeit approximately $23.1 million to the U.S. Treasury in back-taxes and return approximately $17.9 million in illegal fees to a former client.

Krane, 56, was suspended by the State Bar last April following his guilty plea in December 2009 to charges of tax evasion and filing a false statement on a passport application.

He was indicted in June 2009, along with the former chief executive officer of Quellos Group LLC, Jeffrey I. Greenstein, 48, of Mercer Island, Wash., and Charles H. Wilk, 52, of Seattle, an attorney and principal of the Quellos investment firm.

Wilk and Greenstein pleaded guilty, paid $7 million in penalties to the IRS, and were each sentenced to 50 months in prison in January 2011.

Greenstein and Wilk had entered into an agreement to split Quellos’ fees with Krane in exchange for Krane’s assistance in enrolling a client, Haim Saban, in a tax shelter scheme.

Between March 2001, and October 2001, the men drafted false fee agreements that made it appear that Saban 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. 

Krane failed to pay taxes on this income, and when he learned of the criminal investigation of Quellos in February 2008, he applied for a passport in a false name, using a false Social Security Number and California Driver’s License number.

The cases were prosecuted by Assistant U.S. Attorneys Katheryn Kim Frierson, Robert Westinghouse, Jerrod Patterson and Mike Dion.

Saban issued a statement through his new attorney indicating the funds recovered from Krane will be donated to several charitable groups, including Childrens Hospital of Los Angeles, The Saban Free Clinic, Operation Homefront, and Para Los Ninos, to “help those most in need.”


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