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Syndicated Conservation Easement Lawyer

Syndicated Conservation Easement Lawyer

Representing Investors Facing Investment Losses and Tax Penalties

Are you at risk of tax penalties associated with an investment in a syndicated conservation easement? You may have been misled by a promoter of this type of investment who promised exceptionally high returns in the form of sizeable tax deductions. If you’re an investor who was sold a conservation easement product through investment in a partnership or LLC, our syndicated conservation easement lawyer can help you recover losses associated with this scheme. The IRS has a large team of attorneys dedicated to punishing these fraudulent tax shelters and is aggressively pursuing all those involved, including unsuspecting investors.

Talk to our knowledgeable team at Wolper Law Firm to discuss the details of your investment in conservation easements and what legal options you have to protect yourself from losses.

Get help from our lawyer for syndicated conservation easements today. We hold unethical brokers responsible for making misrepresentations to investors. Call us for your free consultation at 800.931.8452.

How Our Attorneys Can Help Investors Caught in a Syndicated Conservation Easement Scheme

Our team at Wolper Law Firm has expertise in representing investors who experience losses caused by fraudulent investment schemes. We understand the intricacies of the IRS initiative to pursue syndicated conservation easements (SCE) and can help you understand your legal options. By working in tandem with the Department of Justice (DOJ), the IRS is aggressively investigating syndicated conservation easements. Our team represents only investors in these cases, not promoters selling SCEs. Our focus is getting investors the best relief available to them, and we will work zealously to obtain that relief.

Our syndicated conservation easement lawyers understand the stress that accompanies an IRS tax investigation and will guide you through every step.

Many investors in partnerships that purchase and donate syndicated conservation easements are unaware that they participated in a tax shelter scheme. Instead, they fell victim to fraudulent investment promoters. Our attorneys at Wolper Law Firm will determine whether a pass-through entity in which you invested puts you at risk for adverse tax consequences, including a penalty or other losses. We may be able to help you recover those losses through a FINRA arbitration claim. Our attorneys are ready to pursue the best outcome possible for you. If your situation merits litigation, speak with one of our attorneys about filing a conservation easements investment losses lawsuit.

If you received a settlement letter from the IRS. Before you make any decisions about how to respond, your first step should be to consult with our experienced attorneys to review all alternatives prior to settlement.

Why Choose a Syndicated Conservation Easement Attorney at Wolper Law Firm?

We Have a Long History of Success Helping Investors Recover Losses

When you work with our team at Wolper Law Firm, 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 advisors. Learn what our past clients have to say about the representation we provided them.

Here’s one example of how we help our clients:

Make your best choice and rely upon a syndicated conservation easement attorney at Wolper Law Firm.

  • 99% recovery rate for investors
  • Millions recovered for clients
  • Representing clients nationwide
  • Attorneys who have represented brokerage firms and understand legal tactics of financial advisors

Innocent investors should not be cheated by dishonest brokers. You can rely on us to work hard to hold the broker or financial advisor that cheated you accountable. Speak with our syndicated conservation easements lawyer at Wolper Law Firm today at 800.931.8452.

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:

  • 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.

This complex arrangement can be confusing to investors. Or they may simply trust their broker or financial advisor 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 advisors, retail investors are sold these opportunities and, 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 advisor or broker selling conservations easements, don’t proceed without talking to our syndicated conservation easement attorney at Wolper Law Firm. 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.

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 advisors 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 pursing legal action against appraisers, promoters, and all members of partnerships. Those partnership members may include investors like you.

It is not surprising 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 today at 800.931.8452. Get a free consultation to discuss your legal options.

An Example of Fraud in Connection with the Sale of Conservation Easements

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 nullifies the tax deductions, investors will potentially be on the hook for unpaid taxes in arrears, plus applicable penalties.

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:

  • 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.

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.

Don’t hesitate to get legal representation from our syndicated conservation easement attorneys at Wolper Law Firm. Rely on our strong knowledge of investment schemes and our record of recovery for investors who experienced losses. Call our team for help at 800.931.8452.

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 up to 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:

  • IRS audits
  • Costs of legal representation
  • Obligation to pay back taxes
  • Penalties for participation in the scheme.

IRS Settlement Program for Syndicated Conservation Easement Investors

Given the large number of investigations of syndicated conservation easements and the volume of cases going to litigation, the IRS created a settlement initiative for taxpayers. In Notice CC-2021-001, the IRS issued the main terms of the settlement offer to which the taxpayer must agree.

Those settlement terms are:

  • The full amount of the deduction resulting from the contribution of a conservation easement will be disallowed.
  • All partners involved in a particular SCE must agree to the settlement.
  • All partners must pay the full amount of taxes, penalties and interest.
  • Partners who provided services (such as Financial Advisors or Appraisers) as part of an SCE must agree to pay the maximum penalty determined by the IRS (which is usually 40%).
  • And in a small silver lining, investors who were part of the partnership may deduct the cost of their investment and pay a reduced penalty of 10-20%. This figure depends on the ratio of their investment to the claimed deduction.

Only those partners who receive a settlement offer are eligible for the settlement program. If a partnership is under criminal investigation, no members of the partnership are eligible for the offer.

Did you receive a settlement offer from the IRS? You should seek legal representation immediately to understand fully all your legal options. Contact our syndicated conservation easement lawyer at Wolper Law Firm to get the guidance you need to participate in the settlement.

Now Is the Time to Contact Wolper Law Firm

If You Fell Prey to Misrepresentation about Conservation Easements, We Can Help

If your financial advisor recommended that you invest in conservation easements or other tax shelters, you may have invested without understanding the risks involved. When the returns on investments are high, the temptation is strong. However, in the case of syndicated conservation easements, you may find yourself in trouble with the IRS and potentially face prosecution by the DOJ.

Now is the time to take action to learn your legal options to protect yourself. You may be able to recover your investment losses, including adverse tax consequences and penalties, through a FINRA arbitration claim. When you speak with our attorneys at Wolper Law Firm we can determine if filing a conservation easements investment losses lawsuit is an option for you. We are positioned to help you navigate the process and secure you a recovery of your losses. We know how to hold brokerage firms and Financial Advisors liable for their misrepresentations and dishonest investment advice.

Speak with our syndicated conservation easements lawyer at Wolper Law Firm today at 800.931.8452 for a free consultation to discuss your legal options.

Attorney Matthew Wolper

Attorney Matthew WolperMatt Wolper is a trial lawyer who focuses exclusively on securities litigation and arbitration. Mr. Wolper has handled hundreds of securities matters nationwide before the Financial Industry Regulatory Authority (FINRA), American Arbitration Association (“AAA”), JAMS, and in state and federal court. Mr. Wolper has handled and tried cases involving complex financial products and strategies ranging from traditional stocks and bonds to options, margin and other securities-based lending products, closed/open-end mutual funds, structured products, hedge funds, and penny stocks. [Attorney Bio]