Virginia Investment Firm Officer Sent to Prison in KPMG Tax Shelter Case
Michael Parker, of Baltimore, Md., who was the chief operating officer of TransCapital Corporation, a tax-advantaged investments company based in Northern Virginia, was sentenced yesterday to 54 months in prison by U.S. District Judge Sandra S. Beckwith in Cincinnati, Ohio, the Justice Department and Internal Revenue Service (IRS) announced. In addition, Parker was sentenced to serve three years of supervised release after his release from prison. In December 2009, Parker pleaded guilty to one count of conspiracy to defraud the United States for his role in KPMG’s promotion, marketing, and implementation of a tax shelter product known as SLOTS.
According to the plea agreement and statements made during trial and related proceedings before U.S. District Judge Sandra S. Beckwith in Cincinnati, Ohio, Parker admitted to conspiring with others to defraud the IRS with regard to tax shelter transactions. Parker, a CPA and an attorney, acted as the Chief Operating Officer of TransCapital Corporation during the alleged conspiracy. Parker testified at the trial of an accountant who was a tax partner at KPMG, LLC, at its Tysons Corner, Va., office, and an attorney for TransCapital, both of whom were acquitted of conspiracy charges after a four-week jury trial.
According to the plea agreement, trial testimony and other statements, from 1998 through 2006, Parker and others marketed and implemented a tax shelter to KPMG clients called the Sale Leaseback of Tenant Improvements Strategy (SLOTS). The SLOTS shelter enabled client corporations to claim tax deductions totaling more than $240 million on corporate income tax returns filed with the IRS. During 2002 through 2004, the IRS audited three U.S. corporations that had claimed losses generated by SLOTS transactions, including The Kroger Company. Parker identified Kroger as the Fortune 500 corporation that did the largest SLOTS tax shelter transaction, and which claimed over $178 million in loss deductions, causing over $64 million in tax loss to the IRS. Parker admitted that he and the others conspired to impede and impair the IRS by making false and misleading statements to IRS agents and attorneys during these audits, including the Kroger audit. Additionally, Parker admitted that he and others concealed certain aspects of the tax shelter transaction from SLOTS clients, including Kroger, for the purpose of impeding and impairing the IRS. Parker further acknowledged that the SLOTS tax shelter and related transactions were themselves nothing more than devices to disguise and conceal mere financing transactions.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, thanked the U.S. Attorney’s Office for the Southern District of Ohio for their assistance in this case, and also thanked the IRS-Criminal Investigation agents who investigated the case, as well as Tax Division Attorneys John E. Sullivan, Richard M. Rolwing, and Alexander Robbins who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax.