Conservation Easement Fraud Attorney
If your financial advisor recommended a syndicated conservation easement investment that now faces IRS scrutiny or has resulted in substantial losses, you may have legal options to recover your money. Conservation easement fraud has cost American investors billions of dollars, and the IRS is aggressively pursuing these abusive tax schemes.
At Varnavides Law, we help investors who were misled into purchasing syndicated conservation easements. As your conservation easement fraud attorney, we pursue claims against the brokers, financial advisors, and promoters who sold these risky investments without properly disclosing the dangers. Our founder spent 10 years defending broker-dealers before switching sides to represent victimized investors, giving us unique insight into how these schemes are structured and marketed.
Key Takeaways
- $36 billion in fraudulent deductions have been claimed through syndicated conservation easements since 2010, according to the IRS
- 28,000 investors are currently under IRS audit for participating in these schemes
- The IRS is auditing 100% of syndicated conservation easement transactions
- October 2024 regulations officially designate these as “listed transactions” with mandatory disclosure requirements
- You may recover losses through FINRA arbitration if a broker or financial advisor recommended the investment
- Time limits apply to filing claims, so prompt action is essential
What Is Conservation Easement Fraud?
A conservation easement is a legitimate legal tool that allows landowners to permanently restrict development on their property in exchange for a tax deduction. When properly structured, these agreements protect environmentally valuable land while providing fair tax benefits.
Conservation easement fraud occurs when promoters exploit this mechanism to generate artificially inflated tax deductions for investors. In a typical abusive scheme, promoters form partnerships that purchase land, obtain grossly inflated appraisals, and then sell interests to investors seeking large charitable deductions. According to the IRS, these syndicated conservation easements are among “the worst of the worst tax scams.”
The fraud lies in the mathematics: investors typically pay a fraction of the claimed deduction value. For example, in one case an investor paid $100,000 for a partnership interest that claimed a $400,000 charitable deduction. This 4-to-1 ratio is a hallmark of abusive schemes that the IRS actively challenges.
How Syndicated Conservation Easement Schemes Work
Understanding how these investments are structured reveals why they often constitute investment fraud. A typical syndicated conservation easement follows this pattern:
Step 1: Land Acquisition
A promoter acquires land, often at a modest price. The property may have little actual development potential or conservation value, but is selected specifically to support inflated valuations.
Step 2: Partnership Formation
A limited partnership or LLC is created to hold the property. Investors purchase interests in this entity, typically through Regulation D private placement offerings sold by financial advisors and broker-dealers.
Step 3: Inflated Appraisal
A compliant appraiser provides a valuation claiming the easement is worth many times the land’s actual value. These “before and after” appraisals often ignore market realities to generate maximum deduction claims.
Step 4: Easement Donation
The partnership donates the conservation easement to a land trust, which may or may not perform adequate due diligence on the inflated valuation. Each partner then claims their share of the charitable deduction.
The problem is not with conservation easements themselves but with schemes designed primarily to generate tax deductions rather than genuine conservation benefits. The IRS looks for transactions where the claimed deduction substantially exceeds the investor’s economic outlay.
Warning Signs of Abusive Conservation Easement Schemes
If you invested in a conservation easement opportunity, certain characteristics suggest you may have been sold an abusive tax shelter. These warning signs indicate potential broker negligence or fraud in how the investment was marketed:
Red Flags That Indicate Potential Fraud
- Deduction-to-investment ratio exceeds 2.5:1 – The IRS specifically targets transactions where claimed deductions are 2.5 times or more than the amount invested
- Emphasis on tax benefits over conservation – Marketing materials focused primarily on tax savings rather than environmental protection
- Pressure to invest quickly – Promoters pushed you to invest before year-end without adequate time for due diligence
- Guaranteed returns or deductions – Promises that the IRS would accept the deduction without challenge
- Complex ownership structures – Multiple entities designed to obscure the true nature of the transaction
- Minimal or no site visits – You never visited the property or received limited information about its actual conservation value
- High promoter fees – Significant portions of your investment went to promoters, organizers, and related parties
IRS Enforcement Actions Against Syndicated Conservation Easements
The IRS has made prosecuting abusive conservation easement schemes a top enforcement priority. According to the Department of Justice, multiple individuals have been criminally prosecuted and sentenced to lengthy prison terms for their roles in these schemes. Understanding the scope of government action helps contextualize the risks investors now face and the potential claims against those who sold these investments.
| Enforcement Metric | Data | Source |
|---|---|---|
| Total fraudulent deductions claimed (since 2010) | $36 billion | IRS |
| Investors currently under audit | 28,000 | IRS 2024 |
| Deductions challenged (2016-2018) | $21 billion | IRS |
| Syndicated deals in 2018 | 296 deals / $9.2 billion in deductions | ProPublica |
| IRS audit rate for syndicated easements | 100% | IRS National Fraud Counsel |
| Criminal convictions to date | 11+ individuals | DOJ 2024 |
Criminal Prosecutions
According to ProPublica, the Department of Justice has secured significant criminal convictions against promoters and professionals involved in these schemes. In January 2024, syndicated conservation easement promoters Jack Fisher and James Sinnott received sentences of 25 and 23 years in federal prison, respectively, after being convicted of conspiracy to defraud the United States and money laundering. Court documents revealed they sold investors nearly $1.4 billion in fraudulent charitable deductions, depriving the IRS of more than $450 million.
In a separate case, Atlanta attorney Vi Bui was sentenced to 16 months in prison for obstructing the IRS in connection with his participation in the promotion of abusive syndicated conservation easement tax shelters. Bui was ordered to pay $8,250,244 in total restitution to the IRS. For example, in one case study involving appraiser Walter Douglas Terry Roberts, the defendant pleaded guilty to fraud charges related to providing inflated valuations. Additional guilty pleas have come from appraisers, accountants, and attorneys involved in these transactions, demonstrating the IRS commitment to pursuing all participants in these schemes, not just the primary promoters.
October 2024: Final Regulations
According to the Federal Register, on October 8, 2024, the IRS issued final regulations officially designating syndicated conservation easements as “listed transactions.” This classification requires material advisors and certain participants to file disclosures with the IRS, with substantial penalties for failure to comply. These regulations formalize what the IRS has maintained since 2016: these transactions are abusive tax shelters.
June 2024: Settlement Offer
According to Wolters Kluwer, the IRS sent time-limited settlement offers to certain taxpayers under audit for syndicated conservation easement participation. The terms require full disallowance of the claimed deduction plus penalties ranging from 10% to 20% for investors, depending on the ratio of claimed deduction to actual investment. Taxpayers with cases pending in Tax Court were excluded from this settlement initiative.
Who Can Be Held Liable for Conservation Easement Fraud?
If you lost money in a syndicated conservation easement scheme, multiple parties may bear responsibility for your losses. Our investigation as your conservation easement attorney focuses on identifying all potentially liable parties to maximize your recovery.
Potentially liable parties include:
- Broker-Dealers: The securities firms that permitted their representatives to sell these investments may be liable for failure to supervise and inadequate due diligence on the products offered to clients.
- Financial Advisors: Individual brokers and advisors who recommended unsuitable investments without adequate disclosure of risks may face claims for breach of fiduciary duty and negligence.
- Promoters and Organizers: The individuals and entities that structured, marketed, and profited from these schemes bear primary responsibility for the fraud perpetrated on investors.
- Appraisers: Appraisers who provided inflated valuations enabling the fraudulent deduction claims may be liable for professional negligence and fraud.
- Tax Professionals: Accountants and tax advisors who recommended participation without adequate warnings about IRS enforcement may face malpractice claims.
- Land Trusts: Some receiving organizations that accepted easements with obviously inflated valuations may bear responsibility for enabling the schemes.
How We Help You Recover Conservation Easement Losses
As your conservation easement fraud attorney, Varnavides Law pursues multiple avenues to recover your investment losses. Our approach depends on how the investment was sold and which parties bear responsibility.
FINRA Arbitration for Broker-Sold Investments
If a registered broker or financial advisor sold you the conservation easement investment, you may pursue claims through FINRA arbitration. According to FINRA, this streamlined dispute resolution process allows investors to seek recovery from broker-dealers without the expense and delay of traditional litigation. Claims typically focus on failure to disclose risks, unsuitable recommendations, and inadequate due diligence.
Our Legal Services Include:
- Case evaluation – We analyze your investment documents, marketing materials, and communications to assess the strength of potential claims
- Investigation – We identify all parties who may be liable for your losses and gather evidence of their misconduct
- FINRA arbitration – We represent investors in claims against broker-dealers and financial advisors through FINRA’s dispute resolution process
- Securities litigation – For claims not subject to arbitration, we pursue recovery through securities litigation in state or federal court
- Coordination with tax counsel – We work with your tax advisors to address IRS audit issues while pursuing civil recovery
Why Choose Varnavides Law as Your Conservation Easement Attorney
Gary Varnavides brings a unique perspective to representing conservation easement fraud victims. Before founding Varnavides Law to represent investors, he spent 10 years at Sichenzia Ross Ference LLP defending broker-dealers against investor claims. This insider experience means we understand the strategies financial institutions use to avoid responsibility and how to counter them effectively.
Insider Knowledge
Ten years defending broker-dealers gave Gary Varnavides deep insight into how these firms operate, the defenses they raise, and the evidence needed to hold them accountable. We use this knowledge to pursue the strongest possible case for our clients.
Securities Law Focus
We concentrate our practice on securities fraud and investment disputes. This focused approach means we stay current on regulatory developments and legal strategies specific to cases like syndicated conservation easement fraud.
Nationwide Representation
While based in Los Angeles, we represent investors throughout the United States in FINRA arbitration proceedings and securities litigation matters.
Personalized Attention
Unlike large firms where your case may be handled by junior associates, Gary Varnavides personally handles each matter, ensuring experienced representation throughout your case.
Understanding Your Legal Options
Investors who lost money in syndicated conservation easement schemes have several potential paths to recovery. The best approach depends on your specific circumstances, including how the investment was sold and which parties may be liable.
| Recovery Option | Best For | Timeframe | Key Advantages |
|---|---|---|---|
| FINRA Arbitration | Investments sold by registered brokers | 12-18 months typical | Streamlined process, binding decision, limited discovery costs |
| Securities Litigation | Claims against promoters, non-registered parties | 2-4 years typical | Broader discovery, jury trial option, class action potential |
| IRS Whistleblower Claims | Reporting scheme promoters | Varies widely | Potential 15-30% award if IRS collects over $2 million |
Time Limits for Filing Claims
If you believe you have a claim related to a conservation easement investment, prompt action is essential. Various statutes of limitations and contractual deadlines may limit your ability to pursue recovery:
- FINRA arbitration – Generally must be filed within 6 years of the events giving rise to the dispute
- Securities fraud claims – Federal claims must typically be brought within 2 years of discovery (or when discovery should have occurred) and no more than 5 years after the violation
- State law claims – Vary by state and type of claim, often ranging from 2 to 4 years
The specific deadlines applicable to your situation depend on multiple factors. We recommend consulting with a conservation easement lawyer as soon as you become aware of potential losses or receive IRS audit notices.
Frequently Asked Questions About Conservation Easement Fraud
What is a syndicated conservation easement?
A syndicated conservation easement is a tax shelter structure where multiple investors purchase interests in a partnership that donates a conservation easement on land it owns. Investors claim charitable deductions based on their share of the easement’s appraised value. The IRS has designated these as abusive tax shelters when the claimed deductions substantially exceed the investors’ actual investment amounts.
How do I know if my conservation easement investment was fraudulent?
Key indicators include: claimed deductions exceeding 2.5 times your investment; marketing focused primarily on tax benefits rather than conservation; pressure to invest quickly; guarantees about IRS acceptance; and receipt of an IRS audit notice challenging the deduction. If you are unsure, a conservation easement lawyer can review your investment documents and advise on potential claims.
Can I recover losses if the IRS disallows my deduction?
Yes. Even if the IRS disallows your charitable deduction and assesses taxes, penalties, and interest, you may still have claims against the brokers, advisors, and promoters who sold you the investment. These parties may be liable for failing to disclose the known risks of IRS challenge and for recommending unsuitable investments.
What is FINRA arbitration and how does it work for conservation easement claims?
FINRA arbitration is a dispute resolution process for claims involving registered broker-dealers and their representatives. If a securities broker sold you the conservation easement investment, you typically must pursue claims through FINRA rather than court. The process involves filing a statement of claim, document exchange, and a hearing before a panel of arbitrators who issue a binding decision.
How much does it cost to hire a conservation easement attorney?
We handle most conservation easement fraud cases on a contingency fee basis, meaning we only collect attorney fees if we recover money for you. During your free consultation, we discuss fee arrangements and any case costs you may be responsible for, such as filing fees and expert witness expenses.
What if my financial advisor says the investment was legitimate?
Financial advisors who sold these investments often have an interest in defending their recommendations. The IRS has been clear since 2016 that syndicated conservation easements are abusive tax shelters, and advisors should have been aware of this regulatory position. An independent evaluation by a conservation easement lawyer can assess whether your advisor fulfilled their obligations to you.
How long do I have to file a claim?
Time limits vary depending on the type of claim and applicable law. FINRA arbitration claims generally must be filed within 6 years, while federal securities fraud claims have shorter deadlines. Because these deadlines are strictly enforced, we recommend consulting with an attorney promptly after discovering potential losses or receiving IRS audit notices.
What compensation can I recover?
Potential recoveries may include: your original investment amount; taxes, penalties, and interest assessed by the IRS; consequential damages resulting from the investment; and in some cases, punitive damages for egregious misconduct. The specific amounts depend on your circumstances and the strength of claims against liable parties.
Take Action to Protect Your Rights
If you invested in a syndicated conservation easement and are facing IRS audit issues or have suffered investment losses, time limits may affect your ability to pursue recovery. Our conservation easement fraud attorneys can evaluate your situation and explain your legal options.
Schedule Your Free Consultation
Contact Varnavides Law today to discuss your conservation easement investment. We offer free, confidential case evaluations to help you understand your options for recovering losses from brokers, advisors, and promoters who sold these abusive tax shelter investments.
