- March 29, 2022
- Green Vista Capital
- Millstone Creek LLC
- Savannah Preserve LLC
- SP Investco Holdings LLC
- Tax Savings Professionals
- TSP Family Office
- Veribest Vesta LLC
The Wolper Law Firm, P.A., PA is investigating claims against various brokerage firms around the country, including Green Vista Capital, that marketed and sold conservation easements to their customers as tax shelter investment opportunities. Green Vista Capital partnered with Tax Savings Professionals n/k/a TSP Family Office, a wealth and asset protection firm in Florida owned by Andrew Miles. Andrew Miles was also a registered representative of Green Vista Capital.
Many of the representations made and marketing materials provided to brokerage firm customers were unsubstantiated and without any attending ruling from the Internal Revenue Services (IRS) that those investments would be afforded advantageous tax treatment.
If you have invested in a conservation easement currently under audit by the IRS, please contact the Wolper Law Firm, P.A. at 800.931.8452 for a free, confidential consultation to discuss your legal options.
What Are Conservation Easements?
A conservation easement is a securitized corporate structure that owns real estate. The landowner(s) sells the right to develop that land in exchange for favorable tax deductions. In many instances, investors are enticed with tax deductions worth multiples of the principal amount of the investment. These investment opportunities are pooled together so that they can be marketed and sold to a broad audience of investors across the country. In theory, there is less development and impact to the ecosystem, which makes the investments also appear socially conscious.
Through a network of brokerage firms and Financial Advisors, retail investors are sold these opportunities. In exchange, brokerages receive high commissions for the sale of these conservation easement products. However, the issuers of the conservation easements and the brokerage firms that are marketing and selling them to retail investors do not have opinion letters from the IRS confirming advantageous tax treatment. Notwithstanding the absence of opinion letters, it is not uncommon that investors are told that they can secure tax deductions equal to or more than four times their principal investment.
In November 2019, the Internal Revenue Service (IRS) issued a warning that it was “increasing its enforcement actions for syndicated conservation easement transactions” and have been consistently denying the value of tax deductions claimed by the investment structure that purchased the rights for the conservation easement.
The IRS has taken this position for two primary reasons. One, the land underlying the conservation easement does not have a true “conservation purpose.” For example, if a tract of land lacks a unique habitat or is still permitting activities that are inconsistent with protecting a habitat or ecosystem, it lacks a conservation purpose. Two, even if the property has a conservation purpose, syndicators of these products are claiming diminution in value to the property caused by the conservation easement to be astronomically higher than appraised by the IRS. For example, if the subject property has a rock quarry that is already barren, it cannot be said that the conservation easement has substantially impaired the financial upside of developing or utilizing the subject property for a different, more economic purpose.
Put simply, the IRS has sent a clear message that it will not allow financial or tax professionals to create investment products that encourage or facilitate inflated tax deductions.
Who are Green Vista Capital and TSP Family Office?
Green Vista Capital is a FINRA member broker-dealer located in Winter Park, Florida. Its primary owner is Philip Van Staden, through an affiliate entity, Green Vista Holdings, LLC. Phillip Van Staden and Pieter Van Staden (believed to be his brother) are also the C-Level executives at True North Resources, which served as the “Manager” of many of the conservation easement deals offered through Green Vista Capital.
Andrew Miles is the founder and Chief Executive Officer of Tax Savings Professionals n/k/a TSP Family Office. Andrew Miles was also a registered representative with Green Vista Capital for many years and participated in the offering of the conservation easements sold through the brokerage firm. Andrew Miles also owns a 50% interest in True North Resources.
Collectively, TSP Family Office, Green Vista Capital, Andrew Miles, Pieter Van Staden and Philip Van Staden marketed and sold conservation easement investment opportunities to clients.
The IRS Has Disallowed the Millstone Creek, LLC and Veribest Vesta, LLC Conservation Easement
Veribest Vesta, LLC is a legal entity formed for the sole purpose of acquiring a conservation easement, which consisted of 55 acres of land in Oglethorpe, Georgia. Millstone Creek, LLC is a legal entity that was formed to acquire a 97% interest in the 55 acres owned by Veribest Vista, LLC. Investors were offered the opportunity to invest in Millstone Creek, LLC and obtain a tax deduction predicated on the ownership interest it had in the conservation easement owned by Veribest Vesta.
Millstone Creek, LLC had an exclusive dealer agreement with Green Vista Capital to market and sell this conservation easement investment to retail clients. TSP Family Office, through Andrew Miles and others, marketed and sold Millstone Creek/Veribest Vesta to clients with the understanding that they could secure a tax deduction of approximately four and one-half times (4.5x) the amount of their principal investment. In other words, for every $100,000 invested, clients could expect to deduct $450,000 from their tax basis.
In March 2022, the IRS notified investors of the Millstone Creek, LLC and Veribest Vesta, LLC conservation easement that its claimed tax deduction of more than $20 million is disallowed and that the actual fair market value of the conservation easement is a mere $120,000. The IRS determined that there was virtually no conservation purpose associated with the subject property.
This has resulted in imputed underpayment of taxes in the amount of $7.5 million, penalties of more than $3 million and an undisclosed assessment of interest against investors. The unpaid taxes, fines and interest will be passed through to the investors of Millstone Creek, LLC and Veribest Vesta.
In addition to these adverse consequences, investors paid significant sums of money to Green Vista Capital, True North Resources and others for their involvement in the syndication, marketing, management and sale of this failed product.
The IRS Is Currently Auditing Savannah Preserve, LLC/SP Investco Holdings, LLC
Another conservation easement offering made by Green Vista Capital is Savannah Preserve, LLC. Savannah Preserve, LLC owns the rights to a conservation easement located in Hart County Georgia. Similar to Millstone Creek, investors in Savannah Preserve were promised tax deductions of more than four times (4x) the principal invested.
In 2019, Savannah Preserve, LLC claimed a $42 million tax deduction as a result of the purported impacted of the conservation easement. In November 2021, the IRS issued a notice to Savannah Preserve that it is auditing the 2019 deduction. Although no final decision has been made by the IRS, the writing appears to be on the wall. The IRS will not accept artificially inflated deductions taken on properties that do not serve a valid conservation purpose.
The Wolper Law Firm, P.A. Represents Investors in FINRA Arbitration
Alternative Investments is a broad term that describes securities that are not offered for sale through a public exchange. These can include a wide variety of offerings, including Conservation Easements, Non-Traded REITs, Business Development Companies, Oil and Gas Limited Partnerships and private equity. Non-traded alternative investments are issued under Regulation D under the Securities Act of 1933. Regulation D provides exemptions from the more rigorous Securities and Exchange Commission (SEC) registration requirements and allows companies to offer and sell securities without extensive disclosures. The absence of standard disclosure requirements often creates conflicts of interest.
The Securities Exchange Commission, federal courts, and FINRA have all found that brokerage firms have a duty to conduct a reasonable investigation concerning the private placements issuer’s representations concerning the security. A brokerage’s firm’s due diligence obligation also stems from suitability obligations requiring the broker to have reasonable grounds to believe that a recommendation to purchase, sell or exchange a security is suitable for the customer.
Financial advisors also have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.
Reasonable basis suitability requires that a recommended investment or investment strategy be suitable or appropriate for at least some investors. Reasonable basis suitability requires an advisor to conduct adequate due diligence so that he or she can determine the risks and rewards of the investment or investment strategy.
The conservation easement investments that purport to offer clients extraordinary tax deductions may not be suitable. Moreover, the marketing and promotion of these products as appropriate investment vehicles with a low percentage chance of audit by the IRS is equally improper. If you have invested in Millstone Creek, LLC/Veribest Vesta, LLC or Savannah Preserve, LLC/SP Investco Holdings, LLC or any other conservation easement currently under audit by the IRS, please contact the Wolper Law Firm, P.A. for a free, confidential consultation to discuss your legal options.
The Wolper Law Firm, P.A. represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, P.A., is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at (800) 931-8452 or by email at firstname.lastname@example.org.