Two Tax Shelter Promoters Found Guilty in Billion-Dollar Syndicated Conservation Easement Tax Scheme
A Maryland man who bought, improved and sold residential real estate pleaded guilty today in U.S. District Court for the District of Maryland to one count of obstructing the lawful functions of the Internal Revenue Service (IRS) and four counts of failing to file personal and corporate income tax returns, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Stephen M. Schenning for the District of Maryland.
According to the indictment and information presented to the court, David J. Simard, 58, purchased and sold real estate in Maryland and elsewhere since the mid-1980s. In January 2008, Simard received notice that the IRS, in connection with an audit of his personal income taxes, had requested documents and information from third parties regarding his real estate transactions. Less than one month after receiving this notice, Simard created Pegasus Home Corporation and began buying and selling properties in its name instead of his own. From 2009 through 2010, Simard purchased and sold 96 properties in the name of Pegasus. Simard attempted to conceal his ownership and control of Pegasus by falsely representing that his relative was the owner. Simard had the same relative apply with the IRS for an employer identification number for Pegasus and used this when buying and selling properties. This caused the IRS to receive information falsely indicating that the relative owned Pegasus. Simard also instructed the relative to open a bank account for Pegasus. Simard did not file personal tax returns for tax years 2009 and 2010, despite earning income requiring him to file. He also did not file corporate tax returns for Pegasus for the same years despite having an obligation to do so.
Sentencing is scheduled for Oct. 12 before U.S. District Judge Roger W. Titus. Simard faces a statutory maximum penalty of three years in prison for obstructing the IRS and one year in prison for each count of failure to file tax returns. He also faces a period of supervised release, restitution and monetary penalties.
Acting Deputy Assistant Attorney General Goldberg and Acting U.S. Attorney Schenning thanked special agents of IRS Criminal Investigation, who conducted the investigation, and Trial Attorneys Michael C. Vasiliadis and Kenneth C. Vert of the Tax Division, who are prosecuting this case.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.