Month: October 2024

Source: United States Department of Justice Criminal Division

A Georgia man pleaded guilty last week to obstructing the IRS related to his participation in the promotion of abusive syndicated conservation easement tax shelters.

According to court documents and statements made in court, Vi Bui was an attorney and partner at Sinnott & Co., an Atlanta-based company. Beginning in at least in 2012 and continuing through at least May 2020, Bui participated in a scheme to defraud the IRS by organizing, marketing, implementing and selling illegal syndicated conservation easement tax shelters created and organized by Jack Fisher, Sinnott and others. For their involvement in the scheme, Fisher and Sinnott were convicted at trial and in January sentenced to 25 and 23 years in prison, respectively.

The scheme entailed the creation of partnerships that would purchase land and land-owning companies and then donate conservation easements over that land or the land itself. Appraisers would allegedly generate fraudulent and inflated appraisals of the conservation easements. The partnerships then claimed a charitable contribution tax deduction based on the inflated value of the conservation easement, resulting in a fraudulent tax deduction flowing to the wealthy clients who purchased units in the partnership. Many of these clients joined the tax shelters after the donation of the interest in land and after the close of the relevant tax year. Bui knew that, to make it appear that the participants had timely purchased their units in the tax shelters, Fisher, Sinnott and others backdated and instructed others to falsify documents, including subscription agreements, checks and other documents. And in at least one instance, Bui falsified documents himself.

Bui anticipated that the syndicated conservation easement transactions would be audited. To deceive the IRS, Bui and others took steps to make the partnerships appear as legitimate real estate development companies. They would create and disseminate lengthy documents disguising the true nature of the transaction, institute sham “votes” for what to do with the land that the partnership owned despite knowing that outcome was predetermined and falsify paperwork, such as appraisals and subscription agreements.

In one instance, when investigators conducted an undercover operation in 2018, Bui, believing that the IRS was auditing an individual’s 2014 tax return, prepared false documents that made it appear that the materials were executed before the purported donation of the conservation easement in 2014 and before the 2014 tax returns had been filed.

Bui earned substantial income for his role in the illegal scheme. He also used the fraudulent tax shelters to evade his own taxes, filing false personal tax returns from 2013 through 2018 that claimed false tax deductions from the illegal syndicated conservation easement tax shelters.

Bui is scheduled to be sentenced on Feb. 13, 2025, and faces a maximum penalty of three years in prison. Bui also faces a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

To date, in addition to the convictions of Fisher and Sinnott noted above, nine additional defendants have pleaded guilty to criminal conduct related to the syndicated conservation easement tax shelter scheme, including appraiser Walter Douglas “Terry” Roberts, accountants Stein Agee; Corey Agee, CPA; Ralph Anderson, CPA; James Benkoil, CPA; Victor Smith, CPA; William Tomasello, CPA; Herbert Lewis,  CPA; and Attorney Randall Lenz.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division, U.S. Attorney Ryan K. Buchanan for the Northern District of Georgia and Chief Guy Ficco of the IRS Criminal Investigation (IRS-CI) made the announcement. They also thanked U.S. Attorney Dena J. King for the Western District of North Carolina for her office’s assistance.

IRS-CI and the U.S. Postal Inspection Service investigated the case.

Trial Attorneys Richard M. Rolwing, Parker Tobin, Jessica Kraft and Nicholas J. Schilling Jr., of the Justice Department’s Tax Division and Assistant U.S. Attorney Christopher Huber and deputy chief of the complex frauds section for the Northern District of Georgia  are prosecuting the case.

Source: United States Department of Justice 2

Note: Read the Department’s fact sheet on this matter here.

The Justice Department today issued a Notice of Proposed Rulemaking (NPRM) to implement President Biden’s Executive Order 14117 (the E.O.) of Feb. 28, “Preventing Access to Americans’ Bulk Sensitive Personal Data and United States Government-Related Data by Countries of Concern.” The E.O. addresses the national security threat posed by the continued effort of certain countries of concern to access and exploit certain kinds of Americans’ sensitive personal data. The President charged the Justice Department with the responsibility of establishing and implementing this new national security regulatory program to address these risks. On March 5, the Department’s Advance Notice of Proposed Rulemaking (ANPRM) was published in the Federal Register. Informed by extensive stakeholder outreach and careful consideration of comments the NPRM addresses public comments received on the ANPRM and proposes a rule to establish this new program and implement the E.O.

This comprehensive proposed rule would implement the E.O. by establishing categorical rules for certain data transactions that pose an unacceptable risk of giving countries of concern or covered persons access to government-related data or bulk U.S. sensitive personal data. Among other things, the proposed rule identifies classes of prohibited and restricted transactions, identifies countries of concern and classes of covered persons to whom the proposed rule applies, identifies classes of exempt transactions, explains the Department’s methodology for establishing bulk thresholds, provides the Department’s initial assessment of economic and other regulatory impacts, establishes processes to issue licenses authorizing certain prohibited or restricted transactions, issue advisory opinions, and designate covered persons, and addresses recordkeeping, reporting, and other due-diligence obligations for covered transactions.

The Justice Department’s National Security Division requests public comment on the proposed rule within 30 days of its publication in the Federal Register. The Department seeks comments on the proposed rule from industry, trade association groups, civil society, subject-matter experts, organizations and entities potentially affected by the proposed rule, and others with interest in the rule or expertise on data security and cybersecurity. The public may submit written comments on the NPRM at www.regulations.gov.

The proposed rule is tailored to address the specific national security risks stemming from access by countries of concern and covered persons to Americans’ bulk sensitive personal data and certain sensitive U.S. government-related data. These measures complement the United States’ commitment to promoting an open, global, interoperable, reliable, and secure internet; protecting human rights online and offline; supporting a vibrant, global economy by promoting cross-border data flows that are required to enable international commerce and trade; and facilitating open investment.

As previewed in the ANPRM, the proposed rule does not authorize the imposition of generalized data localization requirements to store Americans’ bulk sensitive personal data or U.S. Government-related data or to locate computing facilities used to process such data in the United States. As also previewed in the ANPRM, the proposed rule also does not broadly prohibit U.S. persons from engaging in commercial transactions, including exchanging financial and other data as part of the sale of commercial goods and services with countries of concern or covered persons, or impose measures aimed at a broader decoupling of the substantial consumer, economic, scientific, and trade relationships that the United States has with other countries. To reflect this, the NPRM proposes a new exemption for telecommunications services, provides further clarity on exemptions regarding financial services and intra-corporate-group transfers that were previewed in the ANPRM, and seeks public comment on a new proposed exemption for clinical-trial data.

The proposed rule’s prohibitions and restrictions are consistent with other access restrictions on sensitive personal data that have been imposed in other contexts, including for transactions reviewed by the Committee on Foreign Investment in the United States (CFIUS) and the Committee for the Assessment of Foreign Participation in the U.S. Telecommunications Services Sector (Team Telecom). As the ANPRM previewed, the proposed rule exempts several classes of data transactions from the scope of its prohibitions and restrictions, including certain personal communications, financial services, corporate group transactions, transactions authorized by Federal law and international agreements, investment agreements subject to a CFIUS action, telecommunication services, biological product and medical device authorizations, clinical investigations, and others.

As explained in the NPRM, countries of concern can use their access to these types of data to engage in malicious cyber-enabled activities and malign foreign influence activities, bolster their military capabilities, and track and build profiles on U.S. individuals (including members of the military and other Federal employees and contractors) for illicit purposes such as blackmail and espionage. Countries of concern can also exploit this data to collect information on activists, academics, journalists, dissidents, political opponents, or members of nongovernmental organizations or marginalized communities to intimidate them, curb political opposition, limit freedoms of expression, peaceful assembly, or association, or enable other forms of suppression of civil liberties.

The proposed rule would require vendor agreements, employment agreements, and investment agreements that qualify as restricted transactions to comply with the separately proposed security requirements that have been developed by the Department of Homeland Security’s Cybersecurity and Infrastructure Agency (CISA) in coordination with the Justice Department. These proposed security requirements require U.S. persons engaging in a restricted transaction to comply with organizational and system-level requirements, such as ensuring that basic organizational cybersecurity policies, practices, and controls are in place, and data-level requirements, such as data minimization and masking, encryption, and privacy-enhancing techniques. CISA is concurrently making these proposed security requirements available for public comment at www.regulations.gov.

Source: United States Department of Justice 2

A Georgia man pleaded guilty last week to obstructing the IRS related to his participation in the promotion of abusive syndicated conservation easement tax shelters.

According to court documents and statements made in court, Vi Bui was an attorney and partner at Sinnott & Co., an Atlanta-based company. Beginning in at least in 2012 and continuing through at least May 2020, Bui participated in a scheme to defraud the IRS by organizing, marketing, implementing and selling illegal syndicated conservation easement tax shelters created and organized by Jack Fisher, Sinnott and others. For their involvement in the scheme, Fisher and Sinnott were convicted at trial and in January sentenced to 25 and 23 years in prison, respectively.

The scheme entailed the creation of partnerships that would purchase land and land-owning companies and then donate conservation easements over that land or the land itself. Appraisers would allegedly generate fraudulent and inflated appraisals of the conservation easements. The partnerships then claimed a charitable contribution tax deduction based on the inflated value of the conservation easement, resulting in a fraudulent tax deduction flowing to the wealthy clients who purchased units in the partnership. Many of these clients joined the tax shelters after the donation of the interest in land and after the close of the relevant tax year. Bui knew that, to make it appear that the participants had timely purchased their units in the tax shelters, Fisher, Sinnott and others backdated and instructed others to falsify documents, including subscription agreements, checks and other documents. And in at least one instance, Bui falsified documents himself.

Bui anticipated that the syndicated conservation easement transactions would be audited. To deceive the IRS, Bui and others took steps to make the partnerships appear as legitimate real estate development companies. They would create and disseminate lengthy documents disguising the true nature of the transaction, institute sham “votes” for what to do with the land that the partnership owned despite knowing that outcome was predetermined and falsify paperwork, such as appraisals and subscription agreements.

In one instance, when investigators conducted an undercover operation in 2018, Bui, believing that the IRS was auditing an individual’s 2014 tax return, prepared false documents that made it appear that the materials were executed before the purported donation of the conservation easement in 2014 and before the 2014 tax returns had been filed.

Bui earned substantial income for his role in the illegal scheme. He also used the fraudulent tax shelters to evade his own taxes, filing false personal tax returns from 2013 through 2018 that claimed false tax deductions from the illegal syndicated conservation easement tax shelters.

Bui is scheduled to be sentenced on Feb. 13, 2025, and faces a maximum penalty of three years in prison. Bui also faces a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

To date, in addition to the convictions of Fisher and Sinnott noted above, nine additional defendants have pleaded guilty to criminal conduct related to the syndicated conservation easement tax shelter scheme, including appraiser Walter Douglas “Terry” Roberts, accountants Stein Agee; Corey Agee, CPA; Ralph Anderson, CPA; James Benkoil, CPA; Victor Smith, CPA; William Tomasello, CPA; Herbert Lewis,  CPA; and Attorney Randall Lenz.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division, U.S. Attorney Ryan K. Buchanan for the Northern District of Georgia and Chief Guy Ficco of the IRS Criminal Investigation (IRS-CI) made the announcement. They also thanked U.S. Attorney Dena J. King for the Western District of North Carolina for her office’s assistance.

IRS-CI and the U.S. Postal Inspection Service investigated the case.

Trial Attorneys Richard M. Rolwing, Parker Tobin, Jessica Kraft and Nicholas J. Schilling Jr., of the Justice Department’s Tax Division and Assistant U.S. Attorney Christopher Huber and deputy chief of the complex frauds section for the Northern District of Georgia  are prosecuting the case.