Banking firm HVB Group will pay $29.6 million in fines and restitution to avoid criminal prosecution from the U.S. Internal Revenue Service, settling charges that it helped wealthy Americans evade more than $500 million in taxes.

The bank was charged with conspiring to defraud the Internal Revenue Service, evade taxes and file false returns. HVB agreed to cooperate with the U.S. Justice Department in its ongoing probe of illegal tax shelters, and entered no plea as part of a deferred prosecution agreement. If HVB doesn't violate the law for 18 months, the charges will be dismissed.

"HVB acknowledged and accepted criminal responsibility for its participation in the fraudulent tax shelter activity," the bank said in a statement.

In August 2005, a former accountant at HVB pleaded guilty in the first prosecution arising from a Senate investigation of tax shelters. The accountant pleaded guilty to defrauding the IRS and to charges of wire fraud, tax evasion and conspiracy.

A month later, KPMG admitted criminal wrongdoing in creating many of the tax shelters outlined in the case against the accountant, agreeing to pay $456 million in penalties in September, as a grand jury in New York indicted 19 former KPMG executives and a lawyer for Sidley Austin Brown & Wood.

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