Investors Sue Katten Over Alleged Role in Tax Shelter

Two investors have filed suit against Katten Muchin Rosenman charging its predecessor firm promoted a fraudulent tax scheme. Brian and Joelle Kelly claim Rosenman & Colin played a central role in the design, promotion and implementation of a tax structure that “was nothing more than a fee generating scheme.” The Kellys filed a similar complaint against Katten and others in 2008, which was dismissed in 2011 for defects involving the summons and statute of limitations. They re-filed their claims against Katten on Aug. 31.

The Kellys, represented by Jenice Malecki of Malecki Law, argue that Rosenman & Colin drafted a legal opinion purporting to support the legitimacy of the tax structure, called Coastal Trading Common Trust Fund Program Series III, or CTF. Rosenman’s legal opinion was then referenced in an opinion letter by Raymond Ruble, a former tax partner at Sidley Austin, according to the complaint in Kelly v. Katten Muchin Rosenman, 653067/2012, filed in Manhattan Supreme Court. The Kellys had hired Brown & Wood, Sidley’s predecessor firm, to draft a legal opinion on whether the CTF scheme could withstand an IRS challenge.