2 Fraudulent Tax Promoters Receive Hefty Prison Sentences

Fraudulent Tax Deduction Promoters Receive Hefty Prison Sentences

Fraudulent Tax Deduction Promoters Get Hefty Prison Sentences

In recent years, the Internal Revenue Service and the Department of Justice have been actively pursuing financial crime cases. This is to both protect the public, reduce the tax gap, and send a stern message to would-be tax fraudsters. As detailed in a recent press release issued by the DOJ, a pair of fraudulent tax promoters received very hefty prison sentences (23 years and 25 years respectively). The size of this alleged fraud was enormous, and according to prosecutors exceeded $1 billion in fraudulent tax deductions.  Let’s look at what the DOJ says:

Sold Over $1.3 Billion in Fraudulent Tax Deductions

• • • Two men were sentenced today for crimes arising from their organization, promotion and sale of abusive syndicated conservation easement tax shelters.

    • Jack Fisher, a certified public accountant (CPA) who began selling units in his abusive tax shelters at least as early as 2008, was sentenced to 25 years in prison. James Sinnott, an attorney who joined Fisher’s scheme in 2013 and oversaw the massive expansion of the tax shelters’ fraudulent deduction amounts claimed from the IRS, was sentenced to 23 years in prison. Also today, Victor Smith and William Tomasello, both Atlanta-area CPAs, pleaded guilty to conspiracy to defraud the United States.

    • “Using inflated appraisals, backdated documents and other sham actions, these conspirators generated more than $1.3 billion in fraudulent syndicated conservation easement tax deductions, causing hundreds of millions of dollars in losses to the U.S. Treasury,” said Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division. “The significant sentences and convictions obtained are the direct result of the skill and tenacity of career prosecutors and agents, whose multiyear investigation pulled back the curtain on this massive criminal scheme.”

    • “Today’s message should be a clear one: IRS CI Special Agents will use their financial investigative expertise to hold those involved in abusive tax shelter schemes accountable,” said Chief Jim Lee of IRS Criminal Investigation (IRS CI). “As this complex investigation continues to evolve, today’s judicial actions illustrate our resolve to hold responsible every individual involved in tax evasion schemes.”

Jack Fisher and James Sinnott

• • • According to court documents and evidence presented at trial, Fisher, Sinnott and their co-conspirators sold over $1.3 billion in fraudulent tax deductions, leading to a tax loss to the IRS of over $450 million. Five other tax professionals involved in Fisher’s scheme previously pleaded guilty. Fisher was not only a pioneer in the conservation easement industry, but also one of its biggest promoters across the country. Fisher and Sinnott each made millions of dollars promoting and selling their tax shelters to wealthy taxpayers. The two men also used fraudulent deductions generated by their tax shelters on their own personal income tax returns to reduce the taxes they owed on the millions earned.

    • A federal jury sitting in Atlanta convicted Fisher and Sinnott on Sept. 22, 2023, of conspiracy to defraud the United States, conspiracy to commit wire fraud, aiding and assisting the filing of false tax returns and subscribing to false tax returns arising out of their fraudulent tax shelter scheme involving syndicated conservation easements dating back nearly two decades. Fisher was also separately found guilty of money laundering. One of the appraisers who was charged with Fisher and Sinnott pleaded guilty and was sentenced in November 2023. Fisher’s primary assistant, Kate Joy, who was also indicted, remains a fugitive.

    • The evidence proved that Fisher and Sinnott designed, marketed and sold to high-income clients abusive syndicated conservation easement tax shelters based on fraudulently inflated charitable contribution tax deductions, promising them deductions 4.5 times the amount the taxpayer clients paid to buy the deductions.  

    • Fisher and Sinnott used the funds raised from their taxpayer clients to buy land through their property holding companies and then had the tax shelters cause those companies to donate the land or a conservation easement over the land – often within days or weeks of the land’s purchase. To reach the inflated fair market value of the donations, Fisher and Sinnott primarily used appraisals of the conservation easements and fee simple land donations at valuations often more than 10 times higher than the price Fisher and Sinnott actually paid to acquire the property.

    • The evidence further showed that Fisher and Sinnott backdated and instructed others to falsely backdate documents to be presented to the IRS, including subscription agreements, payment documents, engagement letters and other records. Fisher’s accountant, a partner at the accounting firm Fisher started, testified at trial and previously pleaded guilty for his role in the scheme. Along with Fisher and Sinnott, he oversaw the preparation of false tax returns, which claimed charitable contribution tax deductions based upon the false appraisals. The evidence demonstrated that Fisher, Sinnott and others received more than $41 million in payments from the sale of units in these tax shelters that involved backdated documents or untimely payments, which were paid to claim fraudulent and inflated tax deductions.

    • The government proved that Fisher and Sinnott personally made millions from their scheme. Fisher, specifically, used the illegal proceeds to purchase luxury items, including a Mercedes Benz car, a Recreational Vehicle and trailer and a private jet. Fisher also used proceeds of the scheme to purchase homes and condos in the United States and on the Caribbean Island of Bonaire, which the jury found to be forfeitable.

    • In total, the defendants sold over $1.3 billion in fraudulent tax deductions to wealthy taxpayers through this scheme.

    • In addition to the terms of imprisonment, U.S. District Chief Judge Timothy C. Batten for the Northern District of Georgia ordered both Fisher and Sinnott to serve three years of supervised release. He also ordered Fisher to pay approximately $457,855,755 in restitution to the United States and Sinnott to pay approximately $443,760,035 in restitution to the United States.

Victor Smith and William Tomasello

• • • According to court documents and statements made in court, Smith served as a CPA and founding partner of an Atlanta-based accounting firm. Beginning at least in 2014 and through at least 2019, Smith promoted and sold tax deductions to his wealthy clients in the forms of units in illegal syndicated conservation easement tax shelters organized and created by co-defendants Fisher, Sinnott and Joy. For his part, beginning at least in 2015 and through at least 2019, Tomasello also promoted and sold units in the Jack Fisher syndicated conservation easement tax shelters to his wealthy clients at another firm.  

    • Tomasello earned approximately $525,072 in commissions from Fisher and Sinnott for his role in promoting and selling the illegal tax shelters to clients, and his accounting firm received approximately $2,430,301 in commissions. Smith earned approximately $491,400 in commissions from Fisher and Sinnott for his role in promoting and selling the illegal tax shelters to clients.

    • Smith and Tomasello each face a maximum sentence of five years in prison. They also face a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Late Filing Penalties May be Reduced or Avoided

For Taxpayers who did not timely file their FBAR and other international information-related reporting forms, the IRS has developed many different offshore amnesty programs to assist taxpayers with safely getting into compliance. These programs may reduce or even eliminate international reporting penalties.

Current Year vs Prior Year Non-Compliance

Once a taxpayer missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, taxpayers should consider speaking with a Board-Certified Tax Law Specialist who specializes exclusively in these types of offshore disclosure matters.

Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)

In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties. 

Need Help Finding an Experienced Offshore Tax Attorney?

When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting. 

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure. 

Contact our firm today for assistance.