Government Asserts the Defendants Lied and Cheated the IRS out of over $1.3 Billion: The Government’s Opening Statement of the United States v. Fisher

Reader submitted content. Original article published with permission from Polsinelli. Bay Creek’s Preserve Communities CEO Jack Fisher and two others are accused of using syndicated conservation easements to defraud the government.

The first criminal prosecution of syndicated conservation easement promoters began on July 18, 2023, with the government laying out its case against defendants Jack Fisher, James Sinnott, and Clayton Weibel. A Department of Justice Trial Attorney with the Justice Department’s Tax Division told the jury that Fisher was the “mastermind” of a scheme to defraud the government for more than $1.3 billion by fraudulently inflating the appraisals of land donated for conservation purposes, falsifying and backdating documents, checks, and tax returns, and disguising the nature of the scheme as “tax-advantaged real estate investments.”

According to the government’s theory, Fisher would present clients with a deal resembling a rigged money “vending machine” – for each $1 they invested, they would receive $4.50 back. Fisher would then allegedly use skilled professionals including CPAs, attorneys, appraisers, and promoters to create convincing supporting documents and materials to deceive these clients, the IRS, and eventually the Tax Court into believing that the deals were legitimate real estate investments.

One of the key issues to be addressed during the trial is the fair market value (FMV) of the donation of conservation easements on land for the purpose of conservation. The government defined the FMV as what a willing buyer would pay to a willing seller for the land on the open market. The government recognized that appraisers, like Weibel, could use different approaches to determine the FMV of land such as a sales comparison approach, which compares the land to other parcels with a similar highest and best use, or the income approach, which considers the future development of the land to determine the value it holds today. However, when reviewing the appraisals of the land underlying the charitable donations organized by the defendants, the government alleges that the developments contemplated by the appraisals were not ultimately physically or legally permissible because, in certain cases, the land was not properly zoned for the development and defendants had failed at attempts to seek rezoning. According to the Indictment, Fisher stated in recorded meetings that “when you get down to it, these appraisals are all about 30% higher than they should be.” Walter “Terry” Roberts, an appraiser who plead guilty to one count of conspiring to defraud the United States in May, is expected to testify pursuant to his plea agreement with the government regarding the appraisals he and Weibel created for Fisher, according to prosecutors.

The government further alleged that – after the donation had been made – the defendants would share the resulting charitable tax deduction with new clients by backdating checks and tax returns. The manufactured documents would allegedly reflect that the clients had invested before the end of the tax year, in order to claim part of the charitable tax deduction in that year, when the clients had not actually invested until the following year. The Indictment provided an example of one client who reached out in the midst of tax season in 2017 to purchase an additional $100,000 in interest “for 2016.” The effect of this part of the scheme would be to reduce the tax burden for these clients retroactively, after the window of opportunity for the previous year had closed, according to the government.

The trial is expected to last several weeks, and testimony is expected from the original owners of the donated land, other land appraisers who worked with the defendants, co-conspirators who have plead guilty to working with the defendants on the alleged schemes, and the undercover agent who secretly recorded the defendants during the government’s investigation into the defendants. Polsinelli will continue to monitor the trial for additional developments and provide additional coverage.