Conservation Easements Investment Loss Lawyers

Did your broker or investment advisor recommend you invest in conservation easement investments? The securities fraud lawyers of Erez Law is investigating brokers and investment advisors across the country who recommended their clients invest in conservation easement transactions, which the Internal Revenue Service (IRS) is now describing as abusive tax shelters.

Erez Law is investigating whether brokers and investment advisors withheld key facts and failed to conduct adequate due diligence of syndicated conservation easement offerings prior to recommending the offerings to retail investors. Adequate due diligence typically involves conducting meaningful, independent research on material aspects of the offering, identifying red flags with the offering or the issuer, and addressing and resolving concerns that would be relevant to a potential investor. According to the December 2018 the Report on FINRA Examination Findings, brokerage firms should use a reasonable diligence process to mitigate conflicts of interest, ensure that the offerings were suitable for investors in spite of such conflicts of interest, and develop comprehensive disclosures.

Regrettably for some investors, some brokerage firms and investment advisors reviewed relevant offering documentation, but did not adequately disclose the material aspects of the offerings and did not investigate red flags, including significant risk of the IRS disallowing tax deductions, as well as concerns regarding land appraisals.

What is a Conservation Easement?

Conservation easements help to preserve property by restricting development, commercial, industrial and other intrusive uses on the protected property in a permanent capacity. Donors may be eligible for a federal income tax charitable deduction equal to the value of their donation of the land that they purchased, if they follow the requirements in section 170 of the Internal Revenue Code. Appraisers value the easement donation by calculating the difference between the fair market value of the property before and after the easement takes effect.

Syndicated conservation easements are a type of private placement that promises a tax deduction worth 2.5 to 5 times a person’s investment. Brokers and investment brokers target high net worth individuals, such as doctors, entrepreneurs and other rich individuals to buy into partnerships that seek to exploit tax benefits from land conservation.

Syndicated Conservation Easements as Tax Schemes

Some conservation easement syndicators and promoters over-inflated the price of the donated land to maximize the tax deductions, which made the investments more attractive to investors. In fact, some conservation easements were promoted as offering 2.5- to 5-times or more on every dollar invested through tax avoidance; these investments were sold to high-income earners and high net worth individuals. These conservation easement investments were tax schemes that intended to defraud the IRS with fraudulent appraisals, leaving investors to face audits and pay substantial legal fees, interest, millions of dollars in back taxes, and substantial penalties.

In 2016, the IRS, “designated certain syndicated conservation easements as listed transactions. Specifically, the Notice listed transactions where investors in pass-through entities receive promotional material offering the possibility of a charitable contribution deduction worth at least two and half times their investment. In many transactions, the deduction taken is significantly higher than 250 percent of the investment.” This rule required conservation easement transactions to be notated as “listed transactions,” which means that their participants must disclose to the IRS on their tax returns their participation in the transaction. In 1980, Congress created the incentive for tax breaks for conservation easements donated to land trusts or government, for owners who pledge to never develop their properties. This has led to preservation of more than 30 million acres.

The IRS named syndicated conservation easements as one of the dirty dozen list of tax scams to avoid in 2019. According to the IRS, “The IRS is fully committed to putting an end to abusive syndicated conservation easement transactions, and holding accountable the individuals and entities who promoted, assisted with or participated in these schemes. The IRS is committing significant examination and investigative resources to vigorously audit the entities and individuals involved in this scheme, including those who failed to properly disclose their participation as required. Additionally, the IRS is also litigating cases where necessary, with more than 80 currently docketed cases in the Tax Court.” The IRS said that promoters are cheating the system by inflating what the land would be worth if developed and thereby any tax benefits.

In March 2019, the United States Senate Committee on Finance launched an investigation into the potential abuse of syndicated conservation easement investments that may have allowed taxpayers to game the tax code and deprive the federal government of more than $3 billion in revenue in 2014 alone; it has cost even more in the years since.

In October 2020, the Senate Finance Committee introduced a bill that will “protect conservation easements from abuse, save taxpayers billions of dollars and promote conservation around the country.”

In April 2021, IRS Commissioner Charles Rettig told a Senate panel that 28,000 taxpayers are under examination. The IRS has challenged $21 billion in tax deductions that are claimed for syndicated conservation easement investments from 2016 through 2018.

At Erez Law, many of our clients come to us because of our specialization in recovering investment losses. We use considerable legal resources to help investors who trusted their reckless and unethical brokers who recommended private placements such as conservation easements. We have filed many FINRA arbitration cases against large brokerage firms, holding these firms accountable for dishonest investment advisory practices, unsuitable recommendations, misrepresentation, and over-concentration in investments and strategies.

Erez Law has been retained by investors to recover losses caused by investment advisors that recommended conservation easements as a tax mitigation strategy. Erez Law represents investors whose conservation easements have been subject to audit by the IRS and their charitable deductions have been disallowed by the IRS and state tax authorities. In certain cases, our clients have had to pay back taxes, interest and/or fines. If you are in a similar position, Erez Law is available to represent you in recovering such losses.

If you invested in conservation easements without understanding the risks associated with your investment, you may be able to recoup your losses. Our team of financial securities attorneys has experience with FINRA arbitration and AAA arbitration and we know how to hold brokerage firms and advisors liable for their indiscretions. Contact our firm by calling (888) 840-1571 to speak with one of our attorneys about filing a conservation easements investment losses lawsuit.

Erez Law Investigates Brokerage Firms and Investment Advisors Who Recommended Conservation Easements

Erez Law is also currently investigating the following brokerage firms and investment advisors who recommended their clients invest in conservation easements:

  • Creative Planning
  • DDS Tax and Accounting
  • Gupta Wealth Management/Ajay Gupta
  • International Assets Advisory
  • Kalos Capital
  • Whitehall-Parker Securities
  • Otemanu Group
  • Triloma Securities
  • Village Sand Investors

Erez Law is also currently investigating the following conservation easement investments:

  • 15th Street Partners
  • 191 Partners LP
  • 830 Oconee
  • Adam Smith Ventures
  • Albero Investors
  • Aldgate Real Estate Partners
  • Anderson Pointe Investments
  • Aquatic Creek Group
  • Arcadian Quay Holdings
  • Ardan Investors
  • Ash Resources Group
  • Avalon Resources Group
  • Azalea Bay Resort Holdings
  • Bama Soil Partners
  • Barn Creek Partners
  • Basin Mountain LLC
  • Basin Timber Holdings
  • Bates Investments
  • Battelle Investment Group
  • Bayou Sand Investors
  • Bear Creek Investors
  • Bear Creek Timberland Investments
  • Beaverdam Creek Investors
  • Beech Springs Resort Holdings
  • Bellavista Grove Holdings
  • Belle Harbour Resort Holdings
  • Belvoir Investors
  • Benton INV
  • Berkley Road Investors
  • Bickford Farm Investments
  • Bienville 75 Acquisitions
  • Big Anvil Partners LLC
  • Big Hill Partners
  • Blue Ridge Valley Investments
  • Blue Springs Investors
  • Bonlee Investment Properties
  • Bradford Investors
  • Brand Rock Investments
  • Brentwood Real Estate Partners
  • Briar Patch Investments
  • Broadmoor Quarry Investors
  • Broad River Investors
  • Browndale Plantation Reserve Investments
  • Brush Creek Holdings
  • Brushy Hollow Investments
  • Camellia Station Holdings
  • Canary Creek Partners
  • Cape Fear Pointe Holdings
  • Carey Station Investors
  • Carl Parker 52 Investors
  • Carter Investors
  • Cason Investments
  • Cayo Marsopa Holdings
  • Centerland Group
  • CGP Net Lease Mezz Equity I
  • Cherokee 389 Investments
  • Cherry Rock Group
  • Chimney Rock Group
  • Clinton Investments
  • Coastavista Palms Holdings
  • College Creek Investors
  • Cox Point Plantation Investors
  • Crestlawn Investors
  • Crimson S&G Group
  • Cristobal Key Holdings
  • Crockett Investors
  • Cub Creek Reserve Investments
  • CXI Properties
  • Cypress Cove Marina Holdings
  • Cypress Creek Rock
  • Cypress Rock Group
  • Daniel Creek Investments
  • Deep Green Investments
  • Deer Valley Group
  • Delta Sand Investors
  • Derrydown Investors
  • Desoto Investors
  • Dev X Investment 2015
  • Diamond Grande Resort Holdings
  • Dixie Lake Investments
  • Dome Mantle Partners
  • Dover Cliff Partners
  • Dry Creek Partners
  • Dry Mill Creek Investments
  • Duck River Investments
  • Dynamite Creek Partners
  • Echelon Waters Group
  • EcoVest Capital Inc.
  • Edge Rock Partners
  • Elbow Creek Group
  • Emerald Acquisitions 2014
  • Emerald Acquisitions 2015
  • Emerald Acquisitions 2016
  • Emerald Acquisitions 2017
  • Emerald Property Investors
  • Falling Rock Group
  • Fantail Holdings Partners
  • Farm River Partners
  • FCT Investments
  • FG River Partners
  • Field View Group
  • Flint River Rock & Timber Investments
  • Forestar Investors, LLC
  • Fork
  • Fork Creek Partners
  • Galley Resources Partners LLC
  • Georgetown Riverfront Partners
  • Giant Aggregates Partners LLC
  • Ginn Creek Investments
  • Glady Fork Partners
  • Gray Mountain Investors
  • Green Cove Group
  • Green Valley Investors
  • Greenview Group
  • Gretsch Investments
  • Gulf Land Group
  • Gulf Land Investment Partners
  • GWM Capital Real Estate
  • Halyard Holdings Group
  • Hard Rock Partners
  • Harmon INV
  • Harmon North Investments
  • Harmon South Investors
  • Harmony Road Investors
  • Harris Top Investors
  • Harrow Aggregates Partners LLC
  • Hazel Hollow Investments
  • Hillside View Partners
  • Hornet’s Nest
  • Horseshoe Bend Investors
  • Huston Minerals Partners
  • Igneous Rock Group
  • Imperial Aggregates Group
  • Inshore Group
  • Iris Partners
  • Ivery Branch Investors
  • Jackson North Investments
  • Jackson River Partners
  • Jackson South Investments
  • JC Aggregates Partners
  • Jet Rock Partners
  • Jones County Quarry Investors
  • Jubilee Investment Holdings
  • KC Aggregates Group
  • Kinchafoonee Properties
  • KR Stone Group
  • Lakeshore Resort Holdings
  • Lamstall Investors
  • Laurel Creek Investors
  • Lavis Properties Investors
  • Leach Road East
  • Lexington Property Investors
  • Lion’s Gate Investments
  • Little Cedar Stands Investments
  • Little Horse Creek
  • Little Pumpkin Creek Investors
  • Little Pumpkin Creek North Investments
  • Little River Partners
  • Little Satilla Investors
  • LM Bass Partners
  • LMS Grande Pointe
  • Locust Creek Investors
  • Longwood Preserve Investors
  • Low Angle Group
  • Lowland Creek Partners
  • Magnolia Bay Resort Holdings
  • Magnolia River Group
  • Manatee Minerals Group
  • Marchette Investments
  • Matterhorn Property Investors
  • Mattock Holdings Group
  • McGill Investors
  • Mill Creek Investors
  • Monterry Cove Holdings
  • Myrtle West Resort Holdings
  • Nassau River Partners
  • NATRSC Investments
  • Norma Dean I Investors
  • North Bay Cove Holdings
  • North by Northwest II
  • North Donald LA Investors
  • Northshore Property Investments
  • North Unity Henry 92 Investors
  • Northwest VII Investments
  • Nottely River Partners
  • Oak Bayou Group
  • Ocean Grove Resort Holdings
  • Oconee Landing Investors
  • Oconee Quarry Investors
  • Old Durrand Investments
  • Orange Stone Group
  • Orange Woods Partners
  • Otemanu Village Sand Investors LLC
  • Otter Rock Investments
  • Pallur Investors
  • Palmetto Minerals Investors
  • Palmetto Waters Group
  • Paoli Investors
  • Parkerson Church Reserve Investments
  • Parkerson Sands Investments
  • Park Lake III
  • Payne Creek Investors
  • Peeksville Investments
  • Picayune Pearl Aggregates Investors
  • Piney Island Investors
  • Pleasant Ridge Investors
  • Preservation Group
  • QM 40
  • Quail Rock Group
  • Quality Minerals Partners
  • Quality Stones Group
  • Queen’s Cove Holdings
  • Quorum Holdings Partners
  • Rabbit Bar Point Investments
  • Rabun Gap Partners
  • Raisal Holdings
  • Ranch Springs Investors
  • RD Heritage Group
  • RDM Land Holdings
  • Regional Minerals Partners
  • Reliable S&G Group
  • Richland Creek Investors
  • Riddle Aggregates Group
  • Rising Rock Partners Investments
  • River Ridge Retreat Investments
  • Rivershore Sand Investors
  • Riverside Preserve Holdings
  • River Trace Resort Holdings
  • River West SC
  • Roan Creek Investments
  • Roaring Florida Acquisitions
  • Rock Spring Investors
  • Rocky Branch Investments
  • Rocky Comfort Creek Investors
  • Roscoe Road Investors
  • Sailfish Cove Group
  • Salt Marsh Holdings
  • Sand Valley Investors
  • Sanibel Resort Holdings
  • Seavista Resort Holdings
  • Seven Hawks Investments
  • Shurling Investments
  • South Bay Cove Holdings
  • Southeastern Argive Investments
  • South Quail Woods Investors
  • Spade Rock Partners
  • Spring Creek 1600 Acquisitions
  • Spring Hill Partners
  • Sterling Land Partners
  • Storey Hollow Investments
  • Strategic Real Estate Opportunity Fund III
  • Sunfish Cove Group
  • Sycamore Fork Investments
  • Tanyard Investors
  • Tarpon Creek Investments
  • Tater Creek Investments
  • Tennessee Branch Partners
  • Tennessee Ranch Estates Investors
  • TH 28 Partners
  • Tick Creek Holdings
  • Timothy Investors
  • Tom’s Mountain Creek Investments
  • Toscano Investments
  • Two Chip Investors
  • Union Creek Investments
  • Upland Creek Partners
  • Vibrant Minerals Investments
  • Vineyard Ridge Investors
  • Vista Hill Investments
  • Wahoo River Investments
  • Waterway Grove Holdings
  • West Lake Investments
  • White Oak Investments
  • White Path Investors
  • White Sands Village Holdings
  • Yacht Creek Investments
  • Yankee Landing Holdings
  • Yellowhammer S&G Group
  • Yellow River Investors
  • Yield Rock Group
  • Zebra Creek Rock LLC
  • Zenith Aggregates Partners
  • Zorn Island Investments

The IRS is auditing hundreds of conservation easements and taking the position that the deductions claimed are invalid. Investors may be responsible for taxes due, penalties up to 40%, and interest. These losses may be recoverable in an action against the brokerage firm or advisor that recommended the conservation easements.

If you invested in conservation easements on the advice of your broker or investment advisor, and took a charitable contribution deduction that is now being disallowed, you may be able to recover your losses.

Investors are Suing to Recover Conservation Easements Investment Scheme Losses

According to public records, in 2020 a divorced couple filed an arbitration against former financial adviser Ajay Gupta and his firm Gupta Wealth Management (now Creative Planning), who allegedly recommended the couple invest in three land easement funds, one of which was allegedly managed by Gupta Wealth. According to the complaint, the couple invested $350,000 in the three funds that bought into conservation easements in 2015 and 2016 and eventually wound up with a $1.3 million tax bill. Regrettably for the clients, at no time did Gupta Wealth Management advise the couple that conservation easements were speculative and subjected them to a high risk of an audit. According to the complaint, the IRS started to question the appraisals behind the land deals; the couple faced audits from California authorities and the IRS, and they lost their invested capital and were forced to repay the tax deduction as well as interest, penalties, and attorneys’ fees.

Recovering Losses Through FINRA and AAA Arbitrations

Investors in the United States have filed FINRA arbitration claims or AAA arbitration claims against brokers and investment advisors across the country for investments made in conservation easements on the advice of their brokers or advisors. Many of these investors were not adequately warned about the high-risk nature of the investments, and have suffered damages as a result. Investors may have a claim against the brokerage firm or advisory firm based on misrepresentation, unsuitability, breach of fiduciary duty, and state and federal securities laws.

A broker/investment advisor must have reasonable grounds for each recommendation made to investors, considering such factors as the customer’s other securities holdings, financial situation, and risk tolerance. In addition, before a financial advisor recommends security, the financial advisor must conduct due diligence, investigating the facts surrounding the security, to confirm that it is suitable for the customer. The suitability of an investment for a particular individual is at the center of the investment process, and one of the key duties owed by a broker to the customer. A firm may be held liable for its broker/advisor’s failure to recommend suitable investments to its customers.

In addition, pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, the brokerage firm may be liable for investment or other losses suffered by brokers who worked for the firm.

Investment advisors or RIA are held to the fiduciary duty standard and must also perform adequate due diligence on investments they recommend including the recommendation of conservation easements.

Erez Law represents investors in the United States for claims against brokers, brokerage firms, investment advisors and RIAs for wrongdoing. If you have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, investment advisors, RIAs, banks and insurance companies on a contingency fee basis.

Contact Us for a Free Consultation

If you have experienced investment losses as a result of investing in conservation easements, we are here to help. We are not afraid of taking on the largest firms, and we can and will combat some of the largest brokerage firms in the United States. Count on our experience to successfully take you through the FINRA arbitration process.

Please call us at (888) 840-1571 for a free consultation or complete our contact form to investigate your recourse for losses in conservation easement investments. Erez Law is a nationally-recognized law firm representing individuals, trusts, corporations, and institutions in claims against brokerage firms, banks, and insurance companies. If you have more questions about investment fraud, you can visit our securities fraud frequently asked questions page, or contact our firm to speak with one of our qualified fraud attorneys.