Audit and accounting: lawyer, accountant and investment adviser charged in tax shelter case

Haynor, an accountant who was a tax partner at an accounting firm in Tysons Corner, Virginia., and Jon Flask, an attorney who was a partner at a law firm in Vienna, Virginia (the formal address of FinCEN), have been indicted for conspiracy to defraud the Internal Revenue Service (IRS) and for corruptly endeavouring to obstruct and impede the due administration of the internal revenue laws, the Justice Department and IRS announced.

Michael Parker, who was the chief operating officer of TransCapital Corporation, a tax-advantaged investments company based in Northern Virginia, was also charged in a criminal information with conspiracy to defraud the IRS. According to a plea agreement that was also filed today, Parker has agreed to plead guilty to this conspiracy count.

According to the indictment, from 1998 to 2006, Haynor, Flask and Parker marketed and implemented a tax shelter called the "Sale Leaseback of Tenant Improvements Strategy" (SLOTS), which enabled various U.S. corporations to claim tax deductions totalling more than USD240 million on corporate income tax returns filed with the IRS. During 2002 to 2004, the IRS audited three U.S. corporations that had claimed losses generated by SLOTS transactions.

It is alleged that they conspired to defeat IRS investigations by making false and misleading statements during the audits.

The indictment also alleges that Haynor, Flask and Parker concealed certain aspects of the tax shelter transaction from SLOTS clients for the purpose of impeding and impairing the IRS.

According to his plea agreement, Parker admitted that he and others took affirmative steps to conceal, mislead and deceive the IRS by misrepresenting facts concerning SLOTS. Parker further acknowledged that the SLOTS tax shelter and related transactions were themselves nothing more than devices to disguise and conceal mere financing transactions.

Haynor and Flack plead not guilty. If convicted, they face a maximum sentence of eight years in prison and a USD500,000 fine. Parker faces a maximum sentence of five years in prison and a USD250,000 fine.