For the second time in just three years, Quellos Group finds itself at the center of a U.S. Senate hearing that accuses it of dealing in abusive tax shelters, charges the Seattle-based firm says are unfair. “Long ago we ceased involvement in the area of tax-advantaged strategies, which was never our core business,” says Quellos spokesman Michael Gross in a New York Times interview. “We are deeply disturbed by the recent unfair and inaccurate portrayal of our firm and its activities.” According to the Times, tax-shelters helped turn the firm that started out as Quadra Capital Management (it was renamed in 2000) into one of the largest seller of funds of hedge funds in the country. In the case of Quellos – one of many firms currently under investigation for tax-shelter activities – the Senate’s Permanent Subcommittee on Investigation focused on a Quellos tax shelter called Point – the same one that was mentioned in a 2003 report that cited internal documents linking Quellos/Quadra to “formal” arrangements with accounting firms KPMG and PricewaterhouseCoopers involving Flip and Opis, two allegedly abusive tax shelters. Firm founder Jeffrey Greenstein told the Times that the recent report was “unfair, inaccurate and one-sided.”
