Wachovia Corp. agreed to pay $45 million to settle lawsuits related to its work for tax-deferral firm 1031 Tax Group LLC, whose customers were defrauded of more than $126 million by imprisoned con man Edward Okun.
The accord, which needs approval from the U.S. Bankruptcy Court in Manhattan, N.Y., was disclosed in papers filed last week by the trustee liquidating Richmond, Va.-based 1031 Tax Group. Okun, 58, a Miami businessman originally from Canada, was sentenced this month to 100 years in prison for the fraud.
More than 300 claims totaling $167 million have been filed in the bankruptcy case of the 1031 Tax Group. Sixty-five claims are from Colorado victims.
Trustee Gerard McHale sought $140 million in the October lawsuit accusing Wachovia of helping Okun by transferring 1031 Tax Group funds to “inappropriate” accounts before the firm’s collapse in 2007.
Tax-deferral companies hold real-estate sale proceeds under Section 1031 of the U.S. tax code. The arrangement allows customers to defer capital-gains taxes on the sales when they buy similar properties within 180 days.
Denver Post staff writer Andy Vuong contributed to this report.
