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Land Deal Promoters Plead Out DOJ’s First Criminal Easement Case (1)

Dec. 21, 2020, 10:44 PMUpdated: Dec. 21, 2020, 11:13 PM

Two Atlanta tax professionals pleaded guilty to conspiracy charges in what the U.S. Justice Department touted as its first criminal case involving tax-advantaged land deals known as syndicated conservation easements.

The land deals involve promoters encouraging investors to buy into land deals to qualify for tax deductions available when donating land for conservation purposes.

Stein Agee and Corey Agee, who pleaded guilty Monday before U.S. Magistrate Judge W. Carleton Metcalf, promoted and sold the easements from at least 2013 to 2019, the Department of Justice said.

The deals were designed to generate tax breaks through partnerships purporting to make real estate investments. But, the DOJ said, the partnerships were shams that lacked economic substance and didn’t serve a legitimate business purpose.

“The defendants’ and their co-conspirators’ criminal conduct enabled their clients to claim more than $1.2 billion in fraudulent tax deductions and generated hundreds of millions of dollars of tax loss to the United States,” Principal Deputy Assistant Attorney General Richard E. Zuckerman said in a statement.

According to the court dockets, the Agees each pleaded guilty to one count of conspiracy to defraud the U.S., a crime that carries a maximum penalty of five years in prison. They also face a period of supervised release, restitution, and monetary penalties, DOJ said.

IRS Commissioner Charles Rettig said the criminal case should be viewed as the next step in the agency’s crackdown against syndicated easement deals. The issue has been a major enforcement priority for the IRS in the years since the agency flagged them as being ripe for tax abuse.

James F. Wyatt of Wyatt & Blake LLP, counsel for Stein Agee, and Douglas E. Kingsbery of Tharrington Smith LLLP, counsel for Corey Agee, both said in emails that their clients have accepted full responsibility and are cooperating with authorities.

The cases are USA v. Agee, W.D.N.C., No. 1:20-cr-00128, plea entered 12/21/20 and USA v. Agee, W.D.N.C., No. 1:20-cr-00129, plea entered 12/21/20.

(Updates to include comment from attorney in eighth paragraph.)

To contact the reporter on this story: Colleen Murphy in Washington at cmurphy@bloombergtax.com

To contact the editors responsible for this story: Patrick Ambrosio at pambrosio@bloombergtax.com; Yuri Nagano at ynagano@bloombergtax.com