February 4, 2021 Comments Off on GA Tax Professionals Plead Guilty To Promoting Syndicated Conservation Easement Fraud Scheme Blog, Current Investigations, Securities Fraud

GA Tax Professionals Plead Guilty To Promoting Syndicated Conservation Easement Fraud Scheme

GA Tax Professionals Plead Guilty To Promoting Syndicated Conservation Easement Fraud Scheme, featured by top securities fraud attorneys, The White Law Group

Syndicated Conservation Easement Tax Scheme Involving More Than $1.2 Billion In Fraudulent Charitable Deductions

First DOJ Criminal Case Involving Syndicated Conservation Easements Scheme Defrauded IRS out of More than $250 Million in Taxes

According to a press announcement on Monday, December 21, 2020, two Georgia residents, then partners at an Atlanta accounting firm, reportedly pleaded guilty to conspiracy charges related to their roles in a “wide-ranging scheme” to defraud the IRS in connection with syndicated conservation easement investments.

From 2013 through at least December of 2019, the Atlanta accounting firm partners allegedly conspired with others to develop, market, promote, and sell investments in fraudulent syndicated conservation easement tax shelters to high-income taxpayers, according to the DOJ’s press announcement.

Congress originally created the option to deduct the value of a donated conservation easement from an individual’s taxable income as a tool for the protection of environmentally and historically important land. A conservation easement restricts the future use or development of a parcel of land in order to protect its conservation value.

When used appropriately, in compliance with the Internal Revenue Code, a conservation easement can both protect the environment and provide tax incentives to the landowner. Unfortunately in some cases, these syndicated conservation easements tax shelters are designed to “game the system” and to generate “inflated and unwarranted tax deductions,” often through the procurement of inflated appraisals for the undeveloped land and through the sale of interests in partnerships devoid of any legitimate business purpose beyond the transfer of tax benefits, according to the Department of Justice.

In this particular case,  the partners’ unnamed co-conspirators reportedly designed the tax shelters to produce large pass-through tax deductions for high-income taxpayers who bought shares in partnerships and LLCs that purported to make “real estate investments” in plots of land.

In reality, however, these “investment” transactions purportedly lacked economic substance and served no legitimate business purpose beyond the purchase and sale of tax benefits. The co-conspirators allegedly marketed the opportunities to their clients as straightforward tax transactions designed to reduce the clients’ tax liabilities.

For example, the defendants purportedly marketed these particular tax shelters by promising investors that, for every $1 invested in the partnership, the investor would receive more than $4 in “charitable” tax deductions, with no economic risk.

The accounting firm partners, and their co-conspirators purportedly solicited investors after the end of the relevant tax year, and advised them to fraudulently backdate payments and documents so it would appear that their “investments” in the tax shelters were, in fact, in compliance with applicable tax laws, according to court documents. The partners also reportedly prepared and assisted in the preparation of false tax returns for clients who agreed to invest in the bogus tax shelters.

According to the DOJ, between 2013 and 2019, the partners of the accounting firm each purportedly received more than $1.7 million in commissions from the developer of the syndicated conservation easement tax shelters.

Both partners in the accounting firm  reportedly pleaded guilty to one count of conspiracy to defraud the United States, which carries a maximum penalty of five years in prison.

Filing a Complaint against your Brokerage Firm

The White Law Group continues to investigate g potential securities fraud claims involving the liability that sale agents and broker-dealers may have for improperly recommending conservation easements (tax shelter land deals) to unsuspecting investors.

For more information on the White Law Group’s  syndicated conservation easement investigation please see:

Investor Alert: EcoVest Capital, Conservation Easement Investments and Senate Finance Committee Reports Findings in Conservation Easement Investigation.

Investors who received charitable contribution deductions of more than 2.5 times their investment could possibly be audited, and potentially even hit with a revised tax bill.

These syndicated conservation easements may be sold through both independent broker-dealers and directly by attorneys and CPAs who create the syndications and tend to have high commissions and fees.

Prior to making recommendations to an individual investor, brokerage firms are required by the Financial Industry Regulatory Authority (FINRA) to disclose all the risks of an investment. Recommendations should only be made if the investment is suitable for an individual investor given their age, investment objections, investment experience and risk tolerance.

Brokerage firms that do not perform adequate due diligence on an investment and/or make unsuitable recommendations can be held accountable for investment losses through FINRA arbitration.

Free Consultation with a Securities Attorney

If you have invested in a conservation easement (tax shelter land deal),  please call The White Law Group at 1-888-637-5510 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois. To learn more about The White Law Group visit www.whitesecuritieslaw.com.

 

 

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