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Syndicated Conservation Easement Tax Strategy Rejected by IRS RICO Class Action

The Internal Revenue Service (IRS) allows some conservation easements to be considered a noncash charitable contribution deduction, which can have substantial tax benefits for certain individuals. However, the easements must be placed on the property in strict compliance with the terms set by the IRS. The complaint for this class action brings suit against a number of companies and individuals, alleging they have operated a fraudulent Syndicated Conservation Easement (SCE) strategy which, it says, “was not properly implemented and was never intended to be.”

The defendants in this case are five companies—Peachtree Investment Solutions, LLC; Old Ivy Capital Partners, LLC; Bryan Cave Leighton Paisner LLP; Tennille & Associates, Inc.; Foothills Land Conservancy, Inc.; and Warren Averett, LLC—and a number of individuals, who the complaint alleges were involved in the “multi-state, multi-party fraudulent scheme to design, promote, sell and implement a flawed and defective tax strategy”—that is, the SCE strategy.

How did this happen? The complaint mentions that the 2008 recession “left a rampant supply of devalued real estate, along with a group of underemployed real estate appraisers, at least some of whom were eager and willing to provide favorable valuations in exchange for the right sum.”

The companies bought real estate at a discount and resold it to inventors at higher prices, so that the investors could generate a tax deduction from the easement. According to the complaint, the rules and transactions were highly technical and couldn’t be understood by ordinary people. The defendants claimed to be “reputable professionals” and experts on such arrangements so investors were unlikely to question their advice.

For the roles of sponsor, appraiser, attorney, accountant, and so on, the complaint claims, the defendants hired “only those whom they knew through preexisting relationships and/or industry reputation to be ‘willing’ partners in this improper endeavor.”

The complaint alleges that the “association of entities and individuals to promote and implement the SCE Strategy thereby constitutes a racketeering enterprise.”

As the IRS began to catch on to the scheme, the complaint claims the defendants did not tell the participants: They “either minimized or deliberately kept silent about the IRS’s unequivocal position that it would disallow the tax benefits [they’d] promised” to their investors.

Civil and criminal cases have been filed by the US Department of Justice against promoters and organizers of SCE Strategy arrangements.

The class for this action is all persons (1) who were charged for back taxes, penalties, or interest (by a settlement with the IRS, an amended tax return renouncing the SCE Strategy and accepted by the IRS, a final tax court decision, or a Notice of Computational Adjustment from the IRS), between January 1, 2011 and the present, or (2) or for whom the IRS has made a final determination of liability for back taxes, penalties, or interest because of their involvement in an ownership stake in an SCE Strategy designed, marketed, sold, or otherwise handled by the Peachtree and Foothills defendants or any of their related companies.

Article Type: Lawsuit
Topic: Investments, RICO

Most Recent Case Event

Syndicated Conservation Easement Tax Strategy Rejected by IRS RICO Complaint

January 2, 2021

The Internal Revenue Service (IRS) allows some conservation easements to be considered a noncash charitable contribution deduction, which can have substantial tax benefits for certain individuals. However, the easements must be placed on the property in strict compliance with the terms set by the IRS. The complaint for this class action brings suit against a number of companies and individuals, alleging they have operated a fraudulent Syndicated Conservation Easement (SCE) strategy which, it says, “was not properly implemented and was never intended to be.”

Syndicated Conservation Easement Tax Strategy Rejected by IRS RICO Complaint

Case Event History

Syndicated Conservation Easement Tax Strategy Rejected by IRS RICO Complaint

January 2, 2021

The Internal Revenue Service (IRS) allows some conservation easements to be considered a noncash charitable contribution deduction, which can have substantial tax benefits for certain individuals. However, the easements must be placed on the property in strict compliance with the terms set by the IRS. The complaint for this class action brings suit against a number of companies and individuals, alleging they have operated a fraudulent Syndicated Conservation Easement (SCE) strategy which, it says, “was not properly implemented and was never intended to be.”

Syndicated Conservation Easement Tax Strategy Rejected by IRS RICO Complaint
Tags: Fraud, Investments, RICO laws, Tax Advantages