Two accountants have been sentenced to 20 months in prison each for their involvement in a billion-dollar tax scheme involving syndicated conservation easement tax shelters. Victor Smith, a CPA and founding partner of an Atlanta-based accounting firm, promoted and sold these tax deductions from at least 2014 through 2019. His actions resulted in approximately $14 million in false deductions, causing a $4.8 million loss to the IRS. He received $491,400 in commissions for his role.
William Tomasello, another CPA, engaged in similar activities between 2015 and 2019. He sold about $8.5 million in false deductions, resulting in a $2.3 million tax loss to the IRS and earned around $525,072 in commissions.
The fraudulent scheme involved creating partnerships that would purchase land or land-owning companies and then donate conservation easements over the land or the land itself. These donations allowed clients who purchased units in the partnership to claim charitable contribution tax deductions based on appraised values of the conservation easements.
Both Smith and Tomasello were aware that these tax shelters lacked economic substance and were designed solely for obtaining tax benefits for their wealthy clients. They also instructed clients to backdate documents related to these illegal shelters.
In addition to their prison terms, U.S. District Court Judge Timothy C. Batten Sr., ordered Smith to serve two years of supervised release and pay restitution of $4,878,990.90 while Tomasello was ordered three years of supervised release with 120 hours of community service and restitution amounting to $2,386,816.04.
Seven other defendants had previously pleaded guilty concerning this scheme organized by Jack Fisher and James Sinnott who were convicted after trial.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division stated: "IRS Criminal Investigation Chief Guy Ficco made the announcement." The investigation was conducted by IRS Criminal Investigation alongside the U.S. Postal Inspection Service.
Trial Attorneys Richard M. Rolwing, Parker Tobin, Jessica Kraft and Nicholas J. Schilling Jr., along with Assistant U.S Attorney Christopher Huber prosecuted the case.