Federal Prison for Fraudulent Fundraiser and Syndicated Conservation Easement Accountants

While stories of fraud involving charities are unfortunately all too common, sometimes that fraud has very serious consequences for the perpetrators. Here are two recent examples.

In October, the U.S. Department of Justice reported that two accountants who helped promote millions of dollars in false tax deductions based on syndicated conservation easement tax shelters received sentences of 20 months in prison. From the DOJ press release:

According to court documents and statements made in court, Victor Smith was 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 form of units in illegal syndicated conservation easement tax shelters organized and created by co-defendants Jack Fisher, James Sinnott and others. Smith, along with his firm, sold approximately $14 million in false tax deductions to their clients, causing a tax loss to the IRS of about $4.8 million. He earned $491,400 in commissions from Fisher and Sinnott for his role in the scheme.

William Tomasello was a CPA at another accounting firm who, at least in 2015 and through at least 2019, also promoted and sold units to his wealthy clients in these same syndicated conservation easement tax shelters. Tomasello sold approximately $8.5 million in false deductions, causing a tax loss of about $2.3 million. He earned approximately $525,072 in commissions.

It will be interesting to see if more such convictions occur in the wake of Treasury finalizing the regulations classifying syndicated conservation easements as listed transactions, although the legislation that capped deductions for such arrangements at two and a-half times a taxpayer’s investment has likely killed these arrangements going forward.

And earlier this week, the N.Y. Times published an article titled Fund-Raiser Who Pocketed Money Meant for Sick Kids and Vets Gets 10 Years in Prison, detailing the travails of “Richard Zeitlin, a telemarketing kingpin.” The article details his decades of questionable fundraising practices, and the move into political fund-raising that led him into a specific and provable lie – in a word, fraud – and so into prison. See also the related DOJ press release.

Lloyd Mayer