Levi Strauss Finds No Evidence of Tax Fraud

Levi Strauss & Co., the maker of Levi’s jeans, said the company’s audit committee found no evidence of tax fraud after reviewing allegations made by two former employees in a wrongful termination lawsuit.

The committee found that information wasn’t improperly withheld from the Internal Revenue Service, San Francisco-based Levi Strauss said in a statement.

It said the closely held company has communicated with the Securities and Exchange Commission on an informal basis during the committee’s probe.

Independent counsel Simpson Thacher & Bartlett assisted the audit committee in the investigation, Levi Strauss said.

Former tax managers Robert Schmidt and Thomas Walsh, who sued Levi Strauss in April, claimed they were fired after they refused to conceal information from the IRS and Levi Strauss’ auditors. Their suit claimed that Levi Strauss avoided paying $70 million in federal taxes from 1997 through 1999, and created a fake Brazilian tax shelter to deduct $149 million in taxes from 1986 to 1994.

Levi Strauss in May counter-sued the two employees, accusing them of a “conspiracy” to make “false, misleading and defamatory statements” about the company and breaking confidentiality agreements.

Levi Strauss stock is mostly held by the Haas family, descendants of the original founder. The company has about $1.6 billion in publicly traded debt.