A federal grand jury sitting in Atlanta, Georgia, returned an indictment last week charging an Atlanta certified public accountant with one count of conspiracy to defraud the United States; 24 counts of wire fraud; 32 counts of aiding or assisting in the preparation of false federal tax returns; and five counts of filing false federal tax returns relating to a wide-ranging, abusive tax shelter scheme.
According to the indictment, between 2014 and 2019, Herbert E. Lewis conspired with others to market, promote, and sell fraudulent tax shelter transactions in the form of syndicated conservation easement (SCE) donations. The SCE tax shelters allegedly enabled high-income taxpayers to purchase membership interests in purported real estate investment funds. According to the indictment, the funds served no legitimate business purpose, but instead were used to generate large fraudulent tax deductions for its participants based on the donated value of the conservation easements.
To further promote the scheme, the indictment alleges that Lewis allowed clients to purchase units in a given SCE shelter after year’s end and that he advised clients to backdate checks and subscription agreements. Lewis then prepared tax returns for these same clients claiming the non-cash charitable deductions generated by the conservation easement donations despite knowing that they were not entitled to claim the charitable deductions. In total, the conservation easement donations allegedly generated hundreds of millions of dollars in tax deductions that were passed through to the SCE shelters and client taxpayers.
For his part, Lewis allegedly received more than $1 million in commissions for selling the SCE shelters. The indictment also alleges that Lewis filed false individual income tax returns that failed to report a substantial portion of his commission income on his individual tax returns.
If convicted, Lewis faces a statutory maximum sentence of 20 years in prison for each count of wire fraud, five years in prison for conspiring to defraud the United States, three years in prison for each count of filing a false tax return, and three years in prison for each count of aiding and assisting in the preparation of a false tax return. He also faces a period of supervised release, monetary penalties, and restitution.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division, Acting U.S. Attorney Kurt R. Erskine for the Northern District of Georgia, and IRS Commissioner Charles P. Rettig made the announcement.
IRS-Criminal Investigation and the U.S. Postal Inspection Service are investigating the case.
Tax Division Trial Attorneys Brittney Campbell, Grace Albinson, Casey Smith, and Parker Tobin, along with Assistant U.S. Attorney Thomas Krepp of the Northern District of Georgia, are prosecuting the case.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
This is a press release from the US Department of Justice.