DOJ Opens Criminal Probe Into Dubious Tribal Tax Credits (1)

Federal prosecutors have opened a criminal investigation into the sale of so-called sovereign tribal tax credits, which the Treasury Department and IRS have said don’t exist, the Senate Finance Committee said in a letter.

The Department of Justice Tax Division notified White River Energy Corp. and certain investment advisers that they’re subjects of an ongoing probe and has issued subpoenas, according to the letter signed by ranking member Ron Wyden (D-Ore.).

“Committee investigators have confirmed the existence of this DOJ and IRS investigation with information from confidential sources who have firsthand knowledge of the investigation, including attorneys for subjects of the investigation, government officials, and individuals who have been contacted by prosecutors and IRS-CI in connection with the investigation,” the letter reads.

The IRS Criminal Investigation division and White River didn’t immediately respond to requests for comment. DOJ Tax declined to comment, citing policy to neither confirm nor deny the existence of investigations.

White River, a publicly traded company, and third-party promoters have been selling the credits as tax shelters for wealthy investors, Bloomberg Tax first reported in December 2024. Democratic senators in April called on the IRS to launch a criminal investigation into the promoters.

President Donald Trump’s pick for IRS commissioner Billy Long, who was pushed out after two months on the job, helped find potential buyers for the credits while working in the private sector, and people associated with the companies that promoted the credits donated thousands of dollars to Long to help pay off his old campaign debts. White River as recently as this month defended the credits’ legitimacy.

Read Bloomberg Tax’s full investigation into tribal tax credits here.

Federal Investigation

The letter also asks Securities and Exchange Commission Chair Paul Atkins to investigate White River’s failure to comply with reporting obligations. White River, whose shares are traded over the counter, hasn’t made any SEC filings since October 2024, two months before Bloomberg Tax published its investigation into the tribal credits. The letter says that White River should disclose the existence of the criminal investigation to investors, and if it doesn’t, the SEC should consider revoking the registration of White River’s securities.

White River reported in an SEC filing in 2023 that it had sold $24 million in tax credits. That number is likely higher, according to the letter, citing an investor call in which one financial adviser said it alone had sold $30 million worth.

“This evidence is deeply concerning and is indicative of a major scheme to defraud,” the letter reads.

The existence of the federal investigation was first reported by the Wall Street Journal.

White River on Defense

White River is facing a lawsuit from a Florida couple who say they paid $1.62 million to buy the credits, only to have the IRS reject their 2023 tax return and assess $149,000 in penalties. The judge granted White River’s motion to set aside a default judgment entered in the couple’s favor. White River then filed a motion to compel mediation, saying the tax credit agreement required that for any disputes.

“White River takes this matter and will take any similar actions seriously,” the company said in a Sept. 4 release. “It will pursue every available legal recourse.”

The company said in the release that more than 100 taxpayers claiming the credits had their tax returns accepted by the IRS. Having returns accepted is not a final step; the IRS audits tax forms after they’re accepted, and can audit taxpayers after they’ve received a refund. Most audits happen within two years but could go back up to six years, according to the agency.

“Through their own actions, the IRS and its agents manually reviewed and approved the White River corporate tax return and third party tax filings containing these tax credits, thereby effectively conceding that the tax credits are valid,” White River’s press release reads.

The tax credits became a major topic of Long’s confirmation hearing. Long told lawmakers during the hearing that he referred people to buy the credits from Capitol Edge Strategies but didn’t realize there were issues with the credits.

Long said he wasn’t sure if the credits existed or not but would cooperate with an investigation. He was abruptly replaced by Treasury Secretary Scott Bessent last month after two months at the agency.