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— The Internal Revenue Service had said back in 1999 that losses from entities that were not formed for a legitimate business purpose, or deals that lacked "economic substance," would not pass muster. Any deal set up just to generate tax losses is not acceptable, declared the IRS back then, but Deutsche Bank and its minions kept trying new wrinkles to get around that decree, according to the suit.

Eventually, Slatnick and Sonnenberg learned that the shelter for which they had paid dearly would not work. "They voluntarily did the amnesty thing, said they would tell the IRS who did this," says Dreher. "They paid several hundred thousand to the IRS [for taxes owed], and now they are suing to get the money they paid, plus attorneys' fees." All told, they are asking for about $250,000 in the suit.

I called the defendants. Brooks refused comment. Deutsche Bank did not return calls. Says Bishop, who is no longer in financial planning, "The idea that somebody would go ahead with something, knowing it was banned by the IRS, is ridiculous. A tax protester might do that; it's the kind of thing a militia group would do, but it's a ridiculous idea that Deutsche Bank would say, 'Let's just go against the government.' "

Dallas attorney Steve Rasch, who represents the former law firm of Cantley & Sedacca, says, "The firm stands behind the opinions it gave and the legal work it did. As their lawyer, it is my view that everything they did was appropriate."

Deutsche Bank wants to move the case from court to arbitration. Snorts Dreher, " 'Arbitration' is a synonym for 'hide the documents, cover up the truth, avoid justice.' "

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