Department of Justice lawyers, in their case brought over a year ago on December 18, 2018 against the Atlanta-based real estate company, EcoVest Capital Inc. and others, asked Judge Amy Totenberg of the U.S. District Court for the Northern District of Georgia, to delay setting a trial date for at least another two years. EcoVest is a sponsor of real estate investment programs focused on conservation easements.
“EcoVest is appalled to learn that the Department of Justice is seeking to delay a trial for at least another two years,” the company said in a statement. “The Department brought wholly unfounded charges against EcoVest in late 2018, publicly and loudly smearing the company in the process. Since then, the government’s lawyers have refused EcoVest’s calls for a swift and speedy trial.”
Ecovest added, “You would think the government would want to go to trial quickly if their case had any merit. The obvious reason they are continuing to delay is that they have brought a baseless case, which the government lawyers know they will lose. Rather than trying the case in court, the Internal Revenue Service has instead been forced to use the press to try the case. All of EcoVest’s business practices are legal and proper, and we are certain this will be proven at trial.”
The DOJ lawsuit alleges that Ecovest organized, promoted, and sold at least 96 conservation easement syndicates that reported more than $2 billion of tax deductions stemming from “overvalued and improper contributions, and have passed those deductions through to the thousands of customers of the defendants’ scheme, resulting in hundreds of millions of dollars of tax harm.”
The Internal Revenue Code allows a taxpayer to take a charitable donation deduction equivalent to the fair market value of a conservation easement, but only if certain requirements with respect to the donation of an interest in property for conservation purposes are satisfied.
EcoVest has repeatedly claimed that its real estate offerings are legal, proper, and supported by Congressional legislation that seeks to promote private sector participation in land conservation.
The DOJ originally requested a 12-month discovery period, while EcoVest insisted on the four-month period provided by the court’s standard rules. In June 2019, Judge Totenberg granted an eight-month discovery period that was expanded further by an additional five months, while the court considered various motions. The DOJ’s new demands would set the trial date back to mid-2022 and possibly 2023, depending upon how quickly motions for summary judgement are resolved.
The government is seeking disgorgement of the alleged ill-gotten gains and injunctive relief and requested that the defendants provide the names and contact information for anyone who purchased interest in a conservation easement syndicate since 2009.