Why Choose a Syndicated Conservation Easement Attorney at Wolper Law Firm, P.A.?
We Have a Long History of Success Helping Investors Recover Losses
When you work with our team at Wolper Law Firm, P.A., you can count on representation from highly experienced attorneys who have a proven record of success, with a 99% recovery rate for wronged investors. Our attorneys have recovered millions for our clients. Learn more about some of our winning cases and the amounts we recovered.
Attorney Matt Wolper began his career at a large law firm representing the largest Wall Street banks and brokerage firms in large-dollar securities matters. This experience provided him with a deep understanding of the securities industry and how brokerage firms evaluate cases.
We have helped many investors who fell victim to unscrupulous brokers and financial advisers. Learn what our past clients have to say about the representation we provided them.
Here’s one example of how we help our clients:
“I wish I could give the Wolper Law Firm, P.A. 10 stars. The Wolper Law firm got our family out of a horrible situation. They are very Professional. If you need a Law Firm to help you out, I highly Recommend Wolper Law firm. They are extremely hard working and will always have their clients best interest at hand.”
~ Dana P.
Make your best choice and rely upon a syndicated conservation easement attorney at Wolper Law Firm, P.A..
- 99% recovery rate for investors
- Millions recovered for clients
- Representing clients nationwide
- Attorneys who have represented brokerage firms and understand legal tactics of financial advisers.
- They start with creation of pass-through entities that bring together investors in these partnerships or LLCs.
- Investors are charged a fee, as well as providing their investment funds.
- The pass-through entities purchase land.
- They obtain an overvalued appraisal of the land.
- They may claim to have obtained multiple appraisals and taken the lowest one.
- That appraised value is substantially higher than the fair market value of the land.
- They obtain a conservation easement on the land.
- They then donate the land to a charitable entity – often a land trust.
- They may provide opinion letters from attorneys that claim the transaction is legal.
- They obtain a tax deduction based on the appraised value.
- The tax deductions are passed on to the investors.
- Those deductions typically exceed the original investment and fees.
- IRS audits
- Costs of legal representation
- Obligation to pay back taxes
- Penalties for participation in the scheme.
- December 2016 – The IRS listed SCEs as targets for investigation in Notice 2017-10.
- November 2019 – The IRS publicized its increased enforcement action to partner with the DOJ and bring participants in the schemes to justice.
- October 2020 – The IRS provided a settlement offer for investors and promoters of SCEs, giving them opportunity for a reduced tax penalty.
- March 2022 – The IRS takes strong legal action by indicting five tax shelter promoters and two appraisers.
Innocent investors should not be cheated by dishonest brokers. You can rely on us to work hard to hold the broker or financial adviser that cheated you accountable. Speak with our syndicated conservation easements lawyer at Wolper Law Firm, P.A. today at 954.406.1231 / 800.931.8452.
What is Conservation Easement Fraud?
One of the biggest challenges facing high net worth individuals is reducing their taxes. They are in the highest tax brackets and want to avoid paying large sums of money to the IRS. They are looking for deductions that reduce their capital gains and income taxes.
Conservations easements have been touted by fraudsters as the best investment for eliminating taxes. It involves investing in properties that are protected against development, including commercial, industrial, and other intensive uses of the land. Brokers and financial advisers will assert that you can get five times the deduction of what you contribute. This is supposed to lure in those affluent investors that are looking for tax breaks.
The problem is that these are one of the biggest scams targeting the wealthy. The IRS has named conservation easements as one of the top tax scams to avoid. Promoters are trying to cheat the government by inflating the value of the land. This is illegal; more than 28,000 taxpayers are being audited. The IRS estimates that these schemes cost the federal government $21 billion in lost income.
Investors are the ones who suffer in these situations. You are held responsible for the original amount plus interest and penalties of up to 40%. You can sue to recover your losses for the charitable contribution, losses, and penalties if a conservation easement was recommended to you by your financial professional.
The Wolper Law Firm, P.A. can help with our extensive knowledge of the securities industry. We will look at your situation, identify what is happening, and discuss the best options. You work with a dedicated conservation easement attorney that has the knowledge to create successful outcomes.
Contact us now at 954.406.1231 / 800.931.8452 to schedule your free consultation. You are under no obligation and will know exactly what we can do for you.
How Does a Syndicated Conservation Easement Deduction Work?
When a property owner creates a conservation easement on their property, the ability to develop that land in the future is restricted, to protect its conservation value. Those limitations in development can decrease the value of the property. The IRS created tax benefits for landowners who create conservation easements to help defray the loss in value.
Promoters of syndicated conservation easements see an opportunity to make money by potentially defrauding the government and investors alike. They enact this scheme in stages:
This complex arrangement can be confusing to investors. Or they may simply trust their broker or financial adviser and believe they found a great opportunity. Unfortunately, the adage, “if it seems too good to be true, it probably is” applies.
The inflated valuation of land is an essential part of the scheme. The promoters of SCEs do not only target investors directly. Through a network of brokerage firms and financial advisers, retail investors are sold these opportunities who, in exchange, receive high commissions. Another part of the scheme relates to the assertion that the IRS has deemed the conservation easements eligible for the tax discount. Though the promoters may claim this to be the case, if they do not have proof from the IRS, the investment may be fraudulent.
If you have been approached by an adviser or broker selling conservations easements, don’t proceed without talking to our syndicated conservation easement attorney at Wolper Law Firm, P.A.. If you unwittingly invest in an SCE, you risk not only investment losses, but tax penalties as well. Call our knowledgeable team to discuss the details of the potential investment to ensure the choices you make will not create tax problems or legal issues for you.
Why are Conservation Easements Becoming a Problem?
The IRS is cracking down on conservation easements. These scams have been sold to lots of investors, and the number of deductions is skyrocketing.
A syndicated conservation easement is when these properties are combined into a group to call it a conservation easement. This is touted as a great investment and opportunity to reduce your tax liabilities.
The problem is that these deductions are considerably higher than what you are allowed. Many times, these investments are 9 times higher than the actual deduction. The IRS sees these investments as fraudulent activities and is more likely to audit any deductions in a conservation easement.
For example, a high-net-worth investor becomes involved in a conservation easement to reduce his tax liability. They donate $100,000 worth of property that goes into a syndicated conservation easement. The tax deduction is reported as $900,000. The IRS monitors these deductions and audits them. These are much larger than what is allowed under the law.
Conservation easements are investments that should make you cautious. The tax deductions are larger than allowed and this increases the chances that you will face some kind of action from the IRS.
Contact the Wolper Law Firm, P.A. now at 954.406.1231 / 800.931.8452 to speak with a conservation easement lawyer. We have decades of experience and practice in trial and securities law. Our team of dedicated professionals will fight for you and can help you with a conservation easement lawsuit. We have a 99% success rate for our clients and will not stop until getting a successful outcome for your case.
An Increase in Syndicated Conservation Easement Investments Attracts IRS Attention
Not All Conservation Easements Are Targeted in Investigations
Congress established the creation of conservation easements to encourage landowners to protect the environmental value of their property. Landowners may feel a sense of social and environmental responsibility when they donate some or all of their property with a conservation easement. This is part of the attraction to the initiative.
When property owners make a qualified conservation contribution (26 CFR § 1.170A-14) of that property so it will be protected in perpetuity, they receive tax benefits. Those benefits derive from the difference in value between undeveloped and developed land. Undeveloped land typically has lower property value than developed land. By making a charitable donation of land in a conservation easement, property owners can claim a tax break. The value of the donation reflects the value of the land if it were to be developed and sold at fair market value.
Here’s a simplified example of a legal conservation easement transaction:
An investor purchases 10 acres for $20,000. The property is then appraised at the value it would have if it were developed to its highest potential value. That appraised value is $60,000. At this point, the investor makes a charitable donation of that property and receives a tax benefit via a deduction for the value of their charitable contribution. While the investor paid $20,000, their tax deduction is based on the $60,000 appraised value. This tax benefit is completely legal, provided the appraisal is valued appropriately.
Promoters of Syndicated Conservation Easements Take Advantage of the Opportunity
However, financial advisers who see charitable donation of conservation easements as an investment opportunity take advantage of the tax benefits by having the land appraised for a significantly higher value than it is actually worth. They leverage these benefits by creating pass-through entities, like a limited liability company (LLC) or a partnership, and bundle investors’ funds into syndicates that purchase a large number of conservation easements. Then, they work with appraisers who overvalue the property, sometimes significantly. The conservation easements are bundled together as one large, charitable donation made by the pass-through entity.
This arrangement creates sizeable tax deductions for investors in the partnership. Often, the amount of a charitable tax deduction is larger than the initial investment. This arrangement is labeled by the IRS as a “syndicated conservation easement” and is ripe for IRS audit because the agency targets these investments as illegal tax schemes.
The IRS is actively investigating syndicated conservation easement tax shelter schemes and pursuing legal action against appraisers, promoters, and all members of partnerships. Those partnership members may include investors like you.
It is not surprising that the IRS is suspicious when a tax deduction for the appraised value of a conservation easement is higher than the value of the original investment in that property. SCEs are typically valued at at least 2.5 times the original value, and sometimes as high as 10 times the original value of the property.
If you suspect you invested in a fraudulent tax scheme, contact our syndicated conservation easements lawyer at Wolper Law Firm, P.A. today at 954.406.1231 / 800.931.8452. Get a free consultation to discuss your legal options.
Examples of Fraud in Connection With Conservation Easements
The moment the IRS starts coming down on you for investing in a conservation easement is when you need to call us. These schemes are illegal, and those who create and promote the scheme are benefiting from these activities.
In a recently filed case against a large conservation easement issuer, EcoVest Capital, Inc., the Department of Justice alleges that the EcoVest conservation easement was nothing more than “the sale of grossly overvalued federal tax deductions under the guise of investing in a partnership.”
The essence of the scheme involved the overvalued appraisal of the underlying property which, in turn, causes investors to improperly claim artificially inflated deductions on their personal tax returns. If and when the IRS determines that EcoVest and other conservation easement issues overstated the value of their properties in order to maximize the attractiveness of the investment and they nullify the tax deductions, investors will potentially be on the hook for unpaid taxes in arrears, plus applicable penalties.
Most recently a licensed CPA in Boca Raton, Florida (named Randall Lenz) pled guilty to running one of these schemes. He sold them to high-net-worth clients from 2015 to 2019. Lenz admitted that the scheme was illegal and said he made a total of $700,000 in commissions by steering his clients into these investments. The clients were investigated by the IRS and won’t receive the large deductions he promised. They face fines and civil penalties for their involvement.
Contact us now if you are involved in a conservation easement at 954.406.1231 / 800.931.8452. You will speak with a conservation easement attorney that knows the law and will explain to you what we can do, including filing a conservation easement lawsuit.
How did the Fraud Become Widespread?
The IRS will allow you to buy a piece of property and give up all rights to it for conservation purposes. The problem is that the deductions become extreme. This is when more people want those tax deductions that are considerably larger than the money they put in.
A syndicated conservation easement contains multiple properties that are all marked up higher than allowed under IRS guidelines. Those that form the syndicate make the most money with the high commissions and the lack of oversight. You don’t realize there is a problem until you are audited by the IRS for taking such a large deduction.
For example, a billionaire buys a piece of land that has a rundown shack and 80 acres of woods. They are not trying to develop it and want to protect the property for environmental purposes and recreational activities such as hunting. They paid $1 million for everything.
An appraisal shows that if the property were developed for its true real estate potential, it would be worth $10 million. They take a $9 million deduction on their taxes. The billionaire brags to his friends about these deductions and the group wants to do it. Syndicates are formed in these situations where the properties are held and the large deductions are passed onto you.
The problem is that this raises red flags with the IRS. They monitor for anything that is listed as a conservation easement to identify fraud. If you are involved in any of these schemes, the odds are high that you will be audited by the IRS.
The Wolper Law Firm, P.A. can help with these situations. Our team works with you to find out what happened and hold those who are responsible accountable for their actions. These schemes are fraudulent, and you want to work with a conservation easement attorney that knows what to do.
Contact us now at 954.406.1231 / 800.931.8452 to schedule your free initial consultation. We will look over your case and tell you the best options including whether a conservation easement lawsuit makes sense. Our team of dedicated professionals will stand up and fight for you.
When Investors are Left Holding the Bag
How Investors May Be Harmed by Tax Schemes Associated with Syndicated Conservation Easements
When promoters of these tax schemes obtain false appraisals used to overvalue conservation easements, the resulting tax benefits are overvalued as well. Promoters of syndicated conservation easements portray the transactions as great opportunities, rather than unrealistic investment returns. Investors are lured by promises of tax benefits that are 2.5 to 5 times (or more) every dollar invested.
However, by investing in the pass-through entities that purchase the SCEs, investors become unwitting participants in the scheme. The IRS Notice 2017-10 makes clear that all members of a partnership will be assessed a penalty if the partnership is found to be involved in the scheme.
Syndicated Conservation Easement Investments Can Trigger IRS Audits and Result in Significant Penalties
Investors who participate in an SCE transaction must include Form 8886, a Reportable Transaction Disclosure Statement, in their tax filings. This flags the transaction and the taxpayer’s return, which increases the likelihood of an audit. The high number of audits, as reported to the Senate Committee on Finance indicates that the number of these cases brought to litigation will continue to grow.
The abusive tax shelters can create significant problems for investors who may face:
Don’t hesitate to get legal representation from our syndicated conservation easement attorneys at Wolper Law Firm, P.A.. Rely on our strong knowledge of investment schemes and our record of recovery for investors who experienced losses. Call our team for help at 954.406.1231 / 800.931.8452.
IRS and DOJ Investigation of Syndicated Conservation Easements
The IRS Pursuit of Fraudulent Sales of Syndicated Conservation Easements
The IRS has a strong interest in pursuing syndicated conservation easements as abusive transactions that are tax shelter schemes. They were labeled as one of the “Dirty Dozen” investments worthy of IRS investigation in 2019. The IRS Commissioner was clear about their position in a Notice published late that year, stating:
“We will not stop in our pursuit of everyone involved in the creation, marketing, promotion, and wrongful acquisition of artificial, highly inflated deductions based on these aggressive transactions. Every available enforcement option will be considered, including civil penalties and, where appropriate, criminal investigations that could lead to a criminal prosecution.”
Syndicated conservation easement schemes also garnered congressional attention, and the Senate Committee on Finance also launched an investigation of them in March 2019. They published their findings in a comprehensive report in August of 2020. As part of that investigation, they examined the largest promoter of SCEs, EcoVest Capital. In March of 2020, the IRS reported data to the committee tallying the number of transactions they audited.
Aggressive Pursuit of the Fraudulent Tax Shelters
The IRS established a large team to carry out its enforcement strategy. It focuses on the professionals and organizations associated with the transactions. They include promoters, return preparers, organizations that were recipients of the conservation easement donations, and appraisers. To streamline its investigations, the IRS created two new offices that are actively investigating conservation easement transactions: The Promoter Investigation Coordinator and the Office of Fraud Enforcement. There are a large volume of pending SCE cases as the IRS ramps up its investigations.
The growing effort to identify and bring to justice fraudulent SCE promoters became clear when, in January 2022, the agency launched a hiring initiative. The IRS began to hire 200 added attorneys for the sole purpose of targeting syndicated conservation easement tax schemes. The IRS is poised to aggressively pursue the larger, more complex corporate structures that make sophisticated conservation easement transactions.
Timeline of IRS Actions to Pursue Fraudulent Syndicated Conservation Easements
Several years ago, the IRS made clear their intent to investigate the abusive bundling and sale of conservation easements on a large scale with the intent to fraudulently create tax shelters.
Here is a timeline of those actions:
If you were involved in a syndicated conservation easement scheme, you are at risk of a significant tax penalty and may be at risk of criminal action. Whether or not you were aware that your investment in a pass-through entity involved with SCEs was fraudulent, you may be subject to an IRS and DOJ investigation.
Contact a Conservation Easement Attorney Now
A conservation easement should make you cautious. Contact the Wolper Law Firm, P.A. today at 954.406.1231 / 800.931.8452 if you suspect you are the victim of this kind of fraud.
During the free initial consultation, we will go over your options, including suing for investment losses. We have a 99% success rate in recovering money for our clients and will fight for you.