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Bay Creek Acquisitions: Seven Charged in Alleged Tax Shelter Scheme
The US Department of Justice recently indicted seven individuals on charges they conspired to commit fraud in connection with the promotion and appraisal of syndicated conservation easements, including Bay Creek Acquisitions. According to a press release published by the DOJ on March 1, 2022, the individuals indicted are Jack Fisher, James Sinnott, Kate Joy, Herbert Lewis, and Terry Roberts.
As the DOJ explains, its indictment alleges that the individuals “engaged in a conspiracy to design, market and sell false and fraudulent charitable contribution tax deductions to high-income clients.” It alleges more specifically that Mr. Fisher and Mr. Sinnott “caused partnerships to donate conservation easements over land owned by the partnerships,” using Mr. Weibel and Mr. Roberts as their “hand-picked appraisers” to create “fraudulent and inflated appraisals” of the easements, which valued them at figures “at least 10 times higher than the price that was actually paid for the partnership.” Then, the DOJ alleges, the partnerships used the inflated figure when they claimed charitable tax deductions relating to the easements, “resulting in a fraudulent tax deduction flowing to the clients who purchased units in the partnership.”
The DOJ alleges further that these transactions constituted “abusive tax shelters lacking in economic substance or a business purpose,” disguised as legitimate real estate transactions. The alleged scheme involved the sale of more than $1.3 billion “in false and fraudulent tax deductions.” All seven individuals have been charged with conspiracy to defraud the United States. Mr. Fisher, Mr. Sinnott, Mr. Joy, Mr. Roberts, and Mr. Weibel have also been charged with conspiracy to commit wire fraud, while Mr. Lewis and Mr. Smith have been charged with wire fraud. Mr. Fisher has also been charged with money laundering “arising from his purchases of multiple luxury vehicles and domestic and foreign properties with the proceeds of unlawful activity.” Additional charges against these individuals are outlined in the DOJ press release and in the indictment itself.
In a statement about the indictment, Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division said: “The Tax Division is continuing to prioritize prosecution of fraudulent tax shelters, which are designed to enable taxpayers to pay far less than their fair share. “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.”
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