Tax Shelter Litigation
Proven Results Representing Taxpayers against Promoters of Illegal and Abusive Tax Shelters
Since 2003, David R. Deary, W. Ralph Canada, Jr. and their team of highly-skilled attorneys have aggressively represented hundreds of high-net worth individuals who participated in illegal and abusive tax shelters designed, marketed, sold, and implemented by a team of well-known accounting firms, law firms, and investment banks. The Firm has also been lead class counsel in actions involving a variety of tax shelters. The Firm also has experience in representing individuals in virtually every type of illegal and abusive tax shelter that has been promoted and sold since 1999, including but not limited to tax shelters known as:
- Spread Option Strategies
- Digital Options Strategies
- Binary Option Strategies
- Numerous Other Varieties of so-called Son of BOSS Strategies
- Foreign Currency Derivatives
- Distressed Debt Strategies
- 419 Life Insurance Strategies
- HOMER Strategies
- BART Strategies
The Firm’s tax shelter lawyers have recovered approximately $800 million individually and class-wide on behalf of its clients in connection with aggressive litigation against the promoters and professional advisors of the above-listed tax shelters. These lawsuits were commenced all over the country against many of the most high-profile international accounting firms, law firms, and investment firms, including for example:
- Accountants – BDO Seidman, LLP, Ernst & Young, RSM McGladrey, KPMG, Arthur Andersen, and Grant Thornton, as well as many regional accounting firms across the country.
- Investment Firms – Deutsche Bank, Bank One, Societe Generale, Refco, Gramercy, American Express, Lincoln Financial, John Hancock, and Lehman Brothers.
- Law firms – Jenkens & Gilchrist, Sidley Austin Brown & Wood, DeCastro West, Curtis Mallet, Pryor Cashman, Proskauer Rose, Jeffer Mangels, and Dewey Ballantine, among others.
Bloomberg – Refco Aided Grant Thornton in Illegal Tax Shelters
Bloomberg – Deutsche Bank Reaches Settlement
Austin Business Journal – J&G Reaches $81.55 m Settlement
American Lawyer Dec 2003 – Helter Shelter
2001 Merger Has Been Taxing For Sidley Austin
Texas Lawyer March 2004 – DNA Test and lawyer’s Tenacity May Lea to Cuem’s Exoneration
Portland Tribune – Beer family tax suit probed
NYT – Tax Shelter Inquiry Goes Beyond KPMG
NYT – Spotlight on Deutsche Bank’s Tax Shelter Role
NYT – Deutsche Bank Sued Over Tax Shelters
Newsweek – Tax Avoidance
LA Times – Snared By Their Shelters
Flex-N-Gate chief’s suits against advisers proceeding – News-Gazette
DMN – How J&G Lost Its Way 1-8-08
Chicago Tribune – 7 Charged in Phony Tax Shelter Scheme
Current Representations Relating to Captive Insurance and Syndicated Conservation Easements
The IRS continues to pursue taxpayers that have taken part in captive insurance and syndicated conservation easement structures for tax avoidance purposes and has placed abusive micro-captive insurance tax shelters on its list of “Dirty Dozen” tax scams.
As a result of our experience and success in representing over 600 individuals and companies against promoters and professional advisors of illegal and abusive tax shelters since 2003, LFDS is uniquely qualified to assist victimized taxpayers in efforts to recover against promoters and professional advisors of these illegal and abusive tax schemes. We are at the top of the “referral list” of many of the most well-known and highly-skilled tax-controversy lawyers throughout the country who have represented clients in connection with IRS challenges of captive insurance companies or syndicated conservation easements. As a result, we are already representing a large number of individuals who were advised to participate in syndicated conservation easements or captive insurance schemes.
Among those clients are Benyamin Avrahami and Orna Avrahami, whose efforts to defend an IRS challenge to the § 831(b) captive insurance structure they were advised to create recently went to trial with the entire tax lawyer world watching to see the outcome. Unfortunately for the Avrahamis, the IRS prevailed in the case, resulting in substantial damages to the Avrahamis for which they have retained LFDS to aggressively seek and recover from the promoters and professional advisors.
We have gone toe-to-toe against some of the biggest and most powerful firms and have prevailed on behalf of our clients with substantial recoveries. We intend to do the same for our clients with respect to the promoters and other professionals involved in marketing, selling, and implementing illegal and abusive syndicated conservation easement structures and captive insurance companies.
Required Disclosures and Audit Risks
Promoters are required to disclose to the IRS the identity of the taxpayer participating in the structures they promoted and sold, and taxpayers are required to disclose Transactions of Interest on Form 8886, which includes § 831(b) captive insurance structures and conservation easement structures. As a result, taxpayers that have participated in a syndicated conservation easement or in a § 831(b) captive insurance company structure are likely already on the IRS investigation list and may very well be subject to an audit in the very near future.
If you have participated in one of these transactions, it is only a matter of time before the IRS will be contacting you.
For taxpayers that have participated in a captive insurance structure or a syndicated conservation easement, time may be of the essence in making a decision whether to retain counsel to pursue their claims for damages against the promoters and other professional advisors, as the applicable statutes of limitations may have already begun running or will soon begin to run on your claims against the promoters and other professional advisors.
The Firm’s tax shelter practice is led by David R. Deary, W. Ralph Canada, Jr. and Jim Flegle. We have significantly fortified our team, however, through a co-counsel arrangement with both Beckett Cantley and Ed Rappaport.
Beckett G. Cantley is a well-known tax lawyer and law professor with special expertise in the areas of captive insurance and syndicated conservation easements. His body of work includes some of the most cited law review articles, mainstream media publications, and speeches throughout the country and particularly in association with the ABA Committee on Captive Insurance (where he served as Chairman of the Subcommittee on Taxation of the main ABA Committee on Captive Insurance). Mr. Cantley is known as one of the foremost experts on abusive captive insurance transactions, and has a similar reputation with respect to syndicated conservation easements.
Ed Rappaport is a tax lawyer who has significant experience in representing clients in tax controversy matters and representing victims of fraudulent tax shelters. He also has significant experience in both syndicated conservation easements and captive insurance transactions.
Our team is built to be not only a highly successful trial team but also highly qualified in the areas of the applicable tax laws that determine if a syndicated conservation easement or captive insurance transaction is an abusive and illegal tax shelter, enabling us to develop and implement the best strategy to recover damages.
We are ready and willing to talk with you about your syndicated conservation easement or captive insurance company to determine if you have a claim against the promoters and other advisors and your options. If you have a claim, we would be honored to represent you in recovering your damages from the promoters and other professional advisors that knowingly promoted and sold an illegal and abusive tax shelter to you.
If you would like to speak with David R. Deary, please call Janet Bailey, his assistant, at 214-572-1700, and she will schedule a call with David Deary and the team.
Jay A. Soled,
Tax Shelter Malpractice Cases and Their Implications for Tax Compliance, 58 American Univ. L. Rev. 279 (2008).