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Bank Leumi Investor Sues Over $400M Tax Evasion Penalty
Mar 5, 2015 | Law 360
By Eric Kroh
An Israeli shareholder of Bank Leumihas filed a suit in New York state court against the bank and its U.S. subsidiary seeking damages from bank officials over their roles in an alleged tax evasion scheme that cost the bank $400 million in penalties. -
Derivative Action Against Bank Leumi Executives Filed in New York
Mar 5, 2015 | Globes (Hebrew)
By Irit Avissar
Derivative claims continue to flow in the Bank Leumi tax evasion affair. This time it is coming from across the ocean.
Bank Leumi Media Monitoring 03/06/15
English Language Press
Swiss German Language Press - There are no relevant clips to report at this time.
Israeli Press
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Bank Leumi Investor Sues Over $400M Tax Evasion Penalty
Mar 5, 2015 | Law 360
By Eric Kroh
An Israeli shareholder of Bank Leumihas filed a suit in New York state court against the bank and its U.S. subsidiary seeking damages from bank officials over their roles in an alleged tax evasion scheme that cost the bank $400 million in penalties.
The suit, filed Tuesday, asserts that Bank Leumi executives violated their fiduciary duties by failing to ensure that the bank complied with tax laws and regulations, which led to the practices that caused the bank to be investigated by U.S. authorities and to admit to conspiring to assist American taxpayers with hiding income from the Internal Revenue Service.
“Defendants exposed Bank Leumi and Bank Leumi USA to potentially massive liability and criminal prosecution,” plaintiff Michael Porat, an Israeli citizen and holder of Leumi stock, said in court documents.
Porat said he was bringing the action against Bank Leumi USA in part for derivative claims that have not been asserted by the parent company and which are not amenable to suit in Israel. He asked the court to award monetary damages against the defendants for losses suffered as a result of their misconduct. Porat also asked the court to direct Bank Leumi to take necessary actions to reform and improve its governance and procedures and to allow a shareholder vote on actions to increase oversight of bank executives.
In December, Bank Leumi agreed to pay New York authorities $130 million and to oust senior employees to settle an investigation that showed it had actively assisted wealthy Americans in evading taxes. The bank also entered into a deferred prosecution agreement that included a penalty of $270 million with the U.S. Department of Justice.
From at least 2000 through 2011, Bank Leumi and its U.S. subsidiary assisted Americans in maintaining undeclared overseas accounts to conceal money from the IRS and other federal and state authorities, according to New York’s Department of Financial Services.
The bank also offered sham loans — called standby letter of credit-backed loans — to some 234 American customers, allowing them to access their money at a low rate without bringing the money onto the radar of American tax authorities, the agency said. The average size of the loans was $1.2 million, New York authorities said.
Bank Leumi had reveled in the investigations of Swiss banks into similar violations, seeing a business opportunity, according to the DFS. For example, when Justice Department's tax-evasion investigation of UBS AG became public in May 2008, top people at Bank Leumi urged private bankers to suggest to clients “that they transfer their accounts to here (the reasons are understood),” according to the agency.
Bank Leumi could not be immediately reached for comment on the shareholder suit.
Porat is represented by Richard A. Speirs, Daniel B. Rehns and Daniel S. Sommers ofCohen Milstein Sellers & Toll PLLC.
Representation information for Bank Leumi could not immediately be determined.
The case is Porat v. The Bank Leumi Le-Israel Trust Co. Ltd. et al., in the Supreme Court of the State of New York, County of New York. -
Derivative Action Against Bank Leumi Executives Filed in New York
Mar 5, 2015 | Globes (Hebrew)
By Irit Avissar
Derivative claims continue to flow in the Bank Leumi tax evasion affair. This time it is coming from across the ocean. Tonight (Thursday) Bank Leumi announced that a shareholder of the bank, who is an Israeli citizen, filed a request for a derivative suit at the New York Supreme Court.
The request is directed to Bank Leumi and Bank Leumi USA, against 61 directors and officers, past and present some of which still serve in roles in the bank and its subsidiaries.
The claim is demanding that the officials be held accountable for the high fine that Bank Leumi has to pay, that stands at USD 400 million, after admitting that it helped its clients evade taxes.
- Bank Leumi has indicated that it will ask the New York court to remove the case from its hands since two other derivative claims have been filed in the Tel Aviv court and the plaintiff is an Israeli citizen
- The two other claims are against Former Chairman Eitan Raff and former CEO Galia Maor and other past and present executives. The bank has requested that it be allowed to set up an internal independent commission to examine the matter.
Bank Leumi Media Monitoring 03/06/15
English Language Press
Swiss German Language Press - There are no relevant clips to report at this time.
Israeli Press
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