The attorneys at Gana Weinstein LLP are investigating the unsuitable sales of various syndicated conservation easements investment programs. According to newsources, in March 2019, the IRS added syndicated conservation easements schemes to its annual “Dirty Dozen” list of “the worst of the worst tax scams.” In addition, the U.S. Department of Justice filed a fraud lawsuit against big promoters responsible for generating more than $2 billion in improper tax write-offs. Further, the Senate Finance Committee has been investigating these programs demanding thousands of pages of documents from at least six promoters and lawmakers from both parties have introduced legislation to halt the practice.
The scam works as follows, a conservation easement is granted when a landowner permanently protects pristine land from development. The idea is that the public enjoys the benefit of undeveloped land and the taxpayer gets a charitable deduction. However, when a securities offering is created and syndicated promoters then buy land, find an appraiser willing to declare that it has huge development value and thus is worth many many more times the purchase price, and the issuer then turns around and sells stakes in the deal to wealthy investors who extract enorumous tax deductions that are often five or more times what the investment costs.
The IRS says that these bogus deductions for the rich that have cost the treasury billions in revenues.
Atlanta firm EcoVest Capital, a chief target of the Justice Department lawsuit, is one of the biggest promotors of syndicated conservation easements investment programs. The Justice Department suit states that EcoVest has been involved in 51 syndication easement deals since 2009, generating $1.7 billion in federal tax deductions.
An examination of one syndicated deal described by Justice Department complaint states that in 2015 an affiliate of EcoVest acquired 28 acres in North Myrtle Beach, South Carolina, for $1.1 million. The firm then went out and raised around $9 million from investors to buy the property, and made an easement donation. The donation was alleged to be based on a claimed value for what the land would be worth if developed as a multifamily resort but this appraisal resulting in a tax deductions of about $39.7 million. In total, the tax writeoff for investors was $4.12 for every $1 invested.
The IRS and DOJ have launched criminal investigations to stop syndicated easements. Three IRS divisions are conducting examinations of syndication deals after identifying 125 high-risk cases. In addition, more than 80 tax court cases are now pending against partnerships that used the syndicated easement deduction.
An examation of another one offering, Miramar Pointe Holdings LLC, shows how brokerage firms and other entities reap massive profits from these offerings. The Miramar Pointe offering raised capital from 204 investors beginning on December 5, 2018 and the total offering amount sold was purportedly $18,961,022 with sales commissions and fees on the offering estimated at $ 2,154,386, approximately 9% of the offering amount. The brokerage firms involved in these types of offerings include: Arkadios Capital, Capital Investment Group, Centaurus Financial, Center Street Securities, Concorde Investment Services, DFPG Investments, G. A. Repple & Co., International Assets Advisory, Gramercy Securites, Kalos Capital, Lucia Securities, Lion Street Financial, The Strategic Financial Alliance, and United Planner’s Financial Services.
Other known EcoVest Capital offerings include:
- Ohoopee Holdings LLC
- Cayacoa Bay Holdings LLC
- Harbor Gate at Seadrift Holdings LLC
- Espiritu Shores Holdings LLC
- Miramar Pointe Holdings LLC
- Indigo Sound Holdings LLC
- Copano Cove Holdings LLC
- Neuse Harbor Holdings LLC
- Hammersmith Landing Holdings LLC
- Montego Pointe Holdings LLC
- Cottonwood Cove Holdings LLC
- Tortuga Trace Holdings LLC
- Punta Vista Grande Holdings LLC
- EcoVest Total Return Fund LLC
- Santo Bay Resort Holdings LLC
- Tupelo Grove Holdings LLC
- Azul Bay Resort Holdings LLC
- Turkey Creek Resort Holdings LLC
- Birkdale Landing Holdings LLC
- Cayo Dorado Holdings LLC
- Port Quay Resort Holdings LLC
- Del Mar Vista Dunes Holdings LLC
- Myrtle Cove Resort Holdings LLC
- Monterrey Cove Holdings LLC
- Waterway Grove Holdings LLC
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. Investors may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in cases where brokerage firms fail to conduct proper due diligence on securities offerings. Our consultations are free of charge and the firm is only compensated if you recover.