French Broad Crossing in Marshall, North Carolina, on the left bank of the French Broad River, was used as part of a land conservation tax fraud scheme by its developer, Jack Fisher.
Atlanta-based real estate developer and accountant Jack Fisher was sentenced to 25 years in prison after being convicted of running a $1.3B scheme involving fraudulent tax deductions tied to land deals and conservation donations.
His attorney and partner in the scheme, James Sinnott, was also sentenced to 23 years in Atlanta federal court on Tuesday, the Department of Justice announced.
Chief District Judge Timothy Batten handed down the sentences after a jury in September convicted Fisher and Sinnott for the scheme, in which prosecutors found the men reaped more than $40M for syndicating the fraudulent easements and selling them to other investors.
Fisher used the proceeds to buy luxury cars, a private plane and luxury homes in the U.S. and on the Caribbean island of Bonaire, all of which can be seized, the DOJ announced. Batten sentenced Fisher and Sinnott to pay restitution of nearly $500M each to cover the government’s tax losses.
The case stems from a 2022 indictment against Fisher, Sinnott and a host of other accountants and property appraisers on charges of wire fraud, conspiracy to commit wire fraud, preparing false tax returns and filing false tax returns related to easement tax shelters. Fisher was also charged with several counts of money laundering.
Fisher and Sinnott were found to have acquired land and, using hand-picked appraisers, inflated their appraisals on the properties. Fisher would purchase the land and get an appraisal for as much as 10 times the price just months later, using that appraisal to secure an inflated tax deduction.
Using those new values, the partnerships then claimed charitable contributions, resulting in fraudulent tax deductions for the clients in the partnerships.
Fisher organized and promoted 11 conservation easement tax shelters between 2002 and 2012 at two of his land development projects in western North Carolina called The Preserve at Little Pine and French Broad Crossing. In 2013, Fisher expanded the operation into real estate not related to his own developments and enlisted Sinnott in the scheme, selling at least 15 other fraudulent conservation easements, prosecutors said.
“Using inflated appraisals, backdated documents and other sham actions, these conspirators generated more than $1.3B in fraudulent syndicated conservation easement tax deductions, causing hundreds of millions of dollars in losses to the U.S. Treasury,” DOJ Tax Division acting Deputy Assistant Attorney General Stuart Goldberg said in a statement. “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.”
The IRS has long been seeking to crack down on the legal tax deduction known as conservation easements, a rule that has created a loophole that gives landowners and developers a potentially lucrative tax write-off.
The agency’s main investigative focus has been on syndicators, middlemen who buy up and package land, inflate their values with hand-picked appraisers and then create conservancy easements that they sell to investors with promises of larger charitable write-offs than the initial investments.
Fisher promised his investors a return of four times the investment and admitted to an undercover agent that the scheme was illegal, prosecutors said.
The ruling comes as the IRS has made previous attempts to close the tax loophole. The Treasury Department and the IRS in November proposed another set of regulations to shore up the abuse of the conservation tax easement for partnerships and S corporations.
Five other professionals associated with Fisher have pleaded guilty, including appraiser Walter Douglas Roberts, CPAs Stein and Corey Agee, Ralph Anderson and James Benkoil, and attorney Randall Lenz. Although indicted in 2022, Fisher’s assistant Kate Joy remains a fugitive, the DOJ said.
The DOJ also said that Victor Smith and William Tomasello, two Atlanta-area CPAs, pleaded guilty to promoting and selling Fisher’s syndicated tax deductions, each earning some $500K in commissions between 2015 and 2019. Smith and Tomasello face a maximum sentence of five years in prison.