Conspiracy Allegedly Involved Sale of Over $1.3 Billion in Fraudulent Tax Deductions
A federal grand jury sitting in Atlanta, Georgia, returned a superseding indictment charging seven individuals, including Jack Fisher of Preserve Communities and Bay Creek with conspiracy to defraud the United States and other crimes arising out of their promotion of fraudulent tax shelters involving syndicated conservation easements dating back nearly two decades.
According to the superseding indictment, Jack Fisher, an Atlanta certified public accountant (CPA); James Sinnott; Yekaterina Lopuhina, aka “Kate Joy;” Lewis, an Atlanta-area CPA; Victor Smith, an Atlanta-area CPA; Clayton Weibel, a licensed appraiser; and Walter D. Roberts II, aka “Terry Roberts,” a licensed appraiser, engaged in a conspiracy to design, market and sell false and fraudulent charitable contribution tax deductions to high-income clients. Fisher and Sinnott allegedly caused partnerships to donate conservation easements over land owned by the partnerships. In conjunction with those donations, Fisher and Sinnott allegedly used two hand-picked appraisers, Weibel and Roberts, to generate fraudulent and inflated appraisals of the conservation easements that frequently valued the easements at amounts at least 10 times higher than the price that was actually paid for the partnership — often within months of the appraisals. According to the superseding indictment, the partnerships then claimed a charitable contribution tax deduction in the inflated amount of the conservation easement, resulting in a fraudulent tax deduction flowing to the clients who purchased units in the partnership.
Fisher, Sinnott, Joy, Lewis, Smith and other co-conspirators allegedly promoted, marketed and sold partnership units for $25,000 and guaranteed at least a 4-to-1 tax deduction ratio to their clients, which meant that four units with a total cost of $100,000 would yield a $400,000 tax deduction. The marketing materials allegedly stated, for example, that depending on their personal tax rate, such a $400,000 deduction could result in the client receiving $170,000 back within months of purchasing their units for $100,000. Fisher, Sinnott and Joy allegedly provided Roberts and Weibel with spreadsheets containing information purportedly used to value the conservation easements necessary to deliver the tax deduction ratio promised to their clients.
Below is the portion of the indictment that lists the acres of Bay Creek that were used to set up the “preserve” that was linked to the tax fraud scheme:
The superseding indictment charges that the syndicated conservation easement transactions were abusive tax shelters lacking in economic substance or a business purpose. Despite Fisher, Sinnott and Joy allegedly attempting to disguise the transactions as real estate deals, the indictment alleges that the transactions were simply the illegal sale of inflated tax deductions. Additionally, Fisher, Sinnott, Joy, Lewis and Smith allegedly helped clients claim charitable contribution tax deductions after the close of the tax year by accepting late sales, generating backdated documents and preparing, and causing the preparation of, false and fraudulent tax returns and false documents, among other items. 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, for which they face a maximum sentence of five years in prison. In addition, Fisher, Sinnott, Joy, Roberts and Weibel are charged with one count of conspiracy to commit wire fraud, for which each faces a 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 for each 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 which they face a maximum sentence of three years in prison for each count. Fisher, Sinnott, Joy and Lewis are also charged with filing false personal tax returns, for which they each face a maximum sentence of three years in prison for each count. Finally, Fisher is charged with money laundering arising from his purchases of multiple luxury vehicles and domestic and foreign properties with the proceeds of unlawful activity. He faces a maximum sentence of 10 years in prison for each count. In addition to the statutory maximum periods of incarceration, each of the defendants also faces a period of supervised release, monetary penalties, restitution and forfeiture. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
“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,” said Acting Deputy Assistant Attorney General 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 (IRS-CI). “IRS-CI special agents are focused on ending abusive syndicated conservation easements that allow perpetrators of these 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, and they thanked U.S. Attorney Dena J. King for the Western District of North Carolina for her office’s assistance in investigating the case.
Money for nothing, the chicks for free and they don’t even have to worry about getting a blister on their little finger from playing a guitar!
That is the way you do it!
How will this development affect the ability of the Town to negotiate with Preserve Communities for the annexation agreement? Yes, the town’s retained lawyer will work with the lawyers from Preserve Communities – but the lawyer’s client, Jack Fisher, has some control. And this owner is struggling with some serious allegations involving his integrity – and perhaps a heightened awareness of the financial impact on the balance sheet for Preserve Communities – and having to now pay both civil lawyers and criminal lawyers to protect his reputation and businesses.
How will this affect the people that live in the Bay Creek community especially if large fines are levied and tax reimbursements would be necessary. Another concern would be the leadership going forward.
I would think most property owners will be fine. Though Bay Creek club members should be concerned since the clubs are owned by Preserve Communities (NOT THE HOA). I imagine any subsidies Preserve Communities is doing for the Bay Creek clubs will be the first thing they cut.
Be prepared for increasing club dues!
I would bet Preserve Communities will just go into bankruptcy if fines are large and the owed payment for the waste water plant is actually enforced. It is what most corporations do.
Insurance is usually in place for corporate leadership involved in these levels of financials. The property used in scheme is owned by Preserve, not BC. Preserve will more than likely settle out of court. They are a large corporation w/large financial s
Yes, there is Errors and Omissions insurance for corporate leadership but there is no coverage for fraud.
In my opinion the chances of this settling out of court are slim to none, I congratulate the Mirror as well the ES Post for being in the company of Bloomberg as well as Forbes who are covering this story.
The Federal Government would not press this case unless they new they would get a conviction. As you may know, the government wins 97% of the indictments that they file. 1.3 billion dollars of false and fraudulent tax deductions plus the money laundering as well as wire fraud is a federal prosecutors Christmas. They (the Feds) will not go gently into that good night.
Lets hope that this nasty work of the Preserve Communities Founder and CEO does not bleed into our little slice of heaven.
Is this the same Chip that called in a bomb threat at Northampton High School, in 1986 or 87, when he were 18, but went on have a career in Law Enforcement?
I am quite sure that I axed(how do they get thru 12 years of school and pronounce ‘ask’ this way?) you a question….
—-answer to the riddle above—- The teachers are scared of being called a racist or got thru 16 years of schooling themselves and say it the same way.
And the Bay Creek Boondoggle never ends! Cape Charles was duped into a Phoney Agreement. Taxpayers will eventually be holding the bag. Don’t want to see what’s in it.
Dead on the money about the taxpayers eventually holding the bag!
That is what they exist for, afterall.
I remember when this all happened and the course went private. I was able to play the full Nickalus course on or around 11/30/2019 when it was set to close the back 9 on the following day. When I was told they were going to make it a nature preserve, I just assumed that there were some tax advantages to them doing this. This was one of the first moves the new management company made after taking over. Make the courses private and lose the back 9 of the Nickalus course. I don’t live in BC but have had many wonderful days playing those courses so was sad to see this happen. I hope they throw the book at the A-hole in charge who has done all of this.
This story is far from over. Give it a year or two to marinate. The fibbies (Feds) will be all over these knuckleheads and when they strike they will strike hard with evidence in hand.
The whole of the Eastern Shore is almost a preserve and these so called do gooders are going to save some wildlife? The only thing they are saving are taxes and doing so stealing from our country.
Putting it mildly “they are over cooking my grits.” Sure as shooting there is a bad moon rising over Bay Creek. Their deeds will not go un-punished.
I am sure the next owner will re-open the lost nine holes as soon as the current owners lose the course and are doing time at a federally sponsored camp for swindlers.
Are there candy updates on this matter?