Wednesday, December 29, 2010

Rezner v. Bayerische Hypo-Und Vereinsbank (9th Cir. - Dec. 28, 2010)

It's hard to know who to root for it this one.

Do you root for the plainitiff, John Rezner?  He's a rich co-founder of Yahoo! (who created Geocities) who didn't have enough money already, so he decided to enter into a tax scam with fake transactions to diminish the portion going to the United States.  Sounds pretty sympathetic.

Do you root for the defendants, Bayerische Hypo-Und Vereinsbank AG and HVB Structured Finance, Inc.?  They've both got pretty cool names, and they made up the tax scams, recruited rich investors (like Rezner), and pocketed tons of fees -- skimming just a small part of the millions ripped off from the government.  I'm totally sympathetic to them as well.

Tough to figure out who to root for when the one sues the others for RICO violations for inducing him to enter into the tax scam.  Which plaintiff would have been totally happy with except that the IRS caught wind of the scam and disallowed his deductions.

Hold on.  I've figured out who the heroes are.  They're the lawyers at Sidley Austin and LeBoeuf Lamb.  They're the one's who blew the whistle on the scam, ignoring their self-interest and doing the right thing.

Oh.  Wait a minute.  They didn't blow the whistle.  No, they provided tax and other legal advice claiming that the whole thing was legitimate -- and pocketed (like everyone else) healthy fees for doing so.

The only people or entity that I really like in this whole thing is . . . the IRS.  Which has got to make you wonder.

At least the good guys eventually got their due.  Referring, of course, to the taxpayers.  Oh yeah.  And the attorneys at Howard Rice and Gibson Dunn.  Who represented the parties on appeal.  For, obviously, yet another boatload of fees.

Merry Christmas!