Paramus, NJ – A New Jersey Certified Public Accountant (CPA), Ofer Gabbay, has admitted to his role in a scheme that helped wealthy clients cheat on their taxes. Gabbay pleaded guilty yesterday to conspiring to defraud the United States by promoting illegal tax shelters, which allowed his clients to claim massive, unwarranted tax breaks.
What Happened?
Between 2018 and 2019, Gabbay, along with others including Jack Fisher, James Sinnott, and their assistant Kate Joy, pushed what are known as "syndicated conservation easement" tax shelters.
So, what's a "syndicated conservation easement"?
Normally, a "conservation easement" is a legitimate way for landowners to get a tax break. It involves donating the development rights of their land to a charity, ensuring the land remains undeveloped and preserved. In return, they can claim a charitable contribution tax deduction, which reduces their taxable income.
However, the "syndicated" version is often a scam. Promoters buy land, get it wildly over-appraised (valued at much more than it's actually worth), and then sell small portions of it to multiple investors. These investors then claim huge charitable deductions based on the inflated value of the land, even though their actual investment might be much smaller. It's essentially a way to create a fake, inflated donation to get a big tax write-off.
How did the scheme work?
Gabbay and his co-conspirators advised their high-income clients to make these "donations" of conservation easements. To make it look legitimate, they even told clients to use backdated checks, agreements, and other documents to pretend the transactions happened earlier than they did. Gabbay then used these false records to prepare fake tax returns for his clients, helping them claim those improper tax deductions.
What are the consequences?
This wasn't a small-time operation. Jack Fisher and James Sinnott, who were also involved in this scheme, have already been sentenced to significant prison terms – 25 years and 23 years, respectively. Their assistant, Kate Joy, is currently on the run from the law.
As for Ofer Gabbay, he now faces up to five years in prison. The actual length of his sentence will be decided by a federal judge, who will consider the U.S. Sentencing Guidelines. These guidelines are a set of rules that help judges determine appropriate sentences based on the seriousness of the crime and the offender's background.
Beyond prison time, Gabbay could also face a period of "supervised release" (like parole, where he'd be monitored after leaving prison), and will likely have to pay back money to the government (restitution) and other financial penalties.
This case was announced by Acting Deputy Assistant Attorney General Karen E. Kelly of the Justice Department’s Tax Division and is being investigated by IRS Criminal Investigation, showing that the government is serious about cracking down on these types of tax fraud schemes.
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