Five Tax Shelter Promoters and Two Appraisers Indicted in Syndicated Conservation Easement Tax Scheme.
Conspiracy Allegedly Involved Sale of Over $1.3 Billion in Fraudulent Tax Deductions
On February 24th the federal grand jury in Atlanta, Georgia returned a superseding indictment. Seven individuals were charged with conspiracy to defraud the US. Crimes are arising out of their fraudulent tax shelters.
The indictment involves syndicated conservation easements dating back nearly two decades. One of the defendants, Herbert Lewis, was previously charged in an indictment returned on June 9, 2021.
Syndicated Conservation Easement Conspiracy
According to indictment, Jack Fisher, an Atlanta certified public accountant; James Sinnott; Yekaterina Lopuhina, Lewis, an Atlanta-area CPA; Victor Smith, an Atlanta-area CPA; Clayton Weibel, a licensed appraiser; and Walter D. Roberts II, aka “Terry Roberts”, engaged in a conspiracy to sell false and fraudulent charitable contribution tax deductions to high-income clients.
Fisher and Sinnott allegedly caused the partnerships to donate conservation easements land owned by the partnerships. In conjunction with those donations, they used two hand-picked appraisers, Weibel and Roberts for the purpose of generating fraudulent and inflated appraisals of the conservation easements. They frequently valued the easements at amounts much higher than the price paid for the partnership.
The partnerships then claimed a charitable contribution tax deduction in the inflated amount of the conservation easement. It resulted in a fraudulent tax deduction flowing to the clients who purchased units in the partnership.
Conservation Easement Tax Scheme
The marketing brochures stated that depending on their personal tax rate, deductions could result in the client receiving $170,000 back while purchasing their units for $100,000. Fisher, Sinnott and Joy allegedly provided Roberts and Weibel with spreadsheets containing information used to value the conservation easements which are necessary to deliver the tax deduction ratio promised to their clients.
The indictment charges that the syndicated conservation easement transactions are considered abusive tax shelters. They lack in economic substance or a business purpose. Despite Fisher, Sinnott and Joy attempting to disguise the transactions as real estate deals, the indictment states that the transactions were simply the illegal sale of inflated tax deductions.
Fisher, Sinnott, Joy, Lewis and Smith
In addition, Fisher, Sinnott, Joy, Lewis and Smith helped clients claim charitable contribution tax deductions after the close of the tax year by accepting late sales. They generated backdated documents and prepared false and fraudulent tax returns and false documents. In total, the defendants allegedly sold over $1.3 billion in false and fraudulent tax deductions through this scheme.
All defendants are charged with conspiring to defraud the United States. They face a maximum sentence of 5 years in prison. In addition, Fisher, Sinnott, Joy, Roberts and Weibel are charged with conspiracy to commit wire fraud.They face the maximum sentence of 20 years in prison if convicted.
Lewis and Smith are both charged with wire fraud, for which they each face a maximum sentence of 20 years in prison per count. Fisher, Sinnott, Lewis, Smith, Roberts and Weibel are charged with aiding and assisting in the preparation of false returns related to the syndicated conservation easement tax shelters. For that they face a maximum sentence of 3 years in prison per count.
Fisher, Sinnott, Joy and Lewis are also charged with filing false personal tax returns, for which they each face a maximum sentence of 3 years in prison per count.
Fisher is charged with money laundering arising from his purchases of multiple luxury vehicles and properties with the proceeds of unlawful activity. He also faces a sentence of 10 years for each count. In addition to the statutory maximum periods of incarceration, each defendant also faces a period of supervised release, monetary penalties, restitution and forfeiture.
IRS Reaction
“The Tax Division is continuing to prioritize prosecution of fraudulent tax shelters. They are designed to enable taxpayers to pay less than their fair share”, said Stuart M. Goldberg of the Justice Department’s Tax Division.
Those who contemplate promoting fraudulent tax shelters involving syndicated conservation easements – and the accountants, appraisers and tax preparers who create and execute strategies to assist them – should know that the Tax Division and IRS will unravel even the most elaborate schemes.
This superseding indictment demonstrates IRS Criminal Investigation’s commitment to investigate and prosecute illegal
tax shelters”, said Chief Jim Lee of IRS Criminal Investigation.
Special IRS agents are focused on ending abusive syndicated conservation easements which allow perpetrators of such schemes to enrich themselves while their wealthy clients skirt their tax obligations.
Acting Deputy Assistant Attorney General Goldberg of the Tax Division, U.S. Attorney Kurt R. Erskine for the Northern District of Georgia and IRS Criminal Investigation Chief Lee made the announcement together. They thanked U.S. Attorney Dena J. King for the Western District of North Carolina for her office’s assistance in investigating the case.
IRS-CI and the U.S. Postal Inspection Service are investigating the case
Tax Division Trial Attorneys Brittney Campbell, Parker Tobin, Casey Smith and William Guappone, along with Assistant U.S. Attorney Christopher Huber, Deputy Chief of the Complex Frauds Section, of the Northern District of Georgia, are prosecuting the case.
Lance Wallach is an author, speaker on abusive tax shelters and tax expert. If you are looking to recover money from the promoter of an easement or if the IRS has contacted you, call Lance Wallach. As an expert witness, Mr. Wallach has never lost a case.