December 2, 09

NEWS / Virginia Investment Firm Officer Pleads Guilty to Conspiracy with Attorney and KPMG Tax Partner in T

WASHINGTON – Michael Parker of Baltimore, who was the chief operating officer of TransCapital Corporation, a tax-advantaged investments company based in Northen Virginia, pleaded guilty today to one count of conspiracy to defraud the United States, the Justice Department and Internal Revenue Service (IRS) announced.

According to the plea agreement and statements made during the hearing before United States District Judge Sandra S. Beckwith in Cincinnati, Parker admitted to conspiring with Daryl Haynor, an accountant who was a tax partner at KPMG LLC, in its Tysons Corner, Va., office, and Jon Flask, an attorney for TransCapital, who was a partner at a law firm in Vienna, Va., to defraud the IRS with regard to tax shelter transactions. Parker admitted that he was both a CPA and an attorney, but acted as the Chief Operating Officer of TransCaptial Corporation. In October 2009, Haynor and Flask were indicted for conspiracy to defraud the IRS and for corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws.

According to the plea agreement and statements made during the hearing, from 1998 through 2006, Parker, Haynor and Flask marketed and implemented a tax shelter to KPMG clients called the Sale Leaseback of Tenant Improvements Strategy (SLOTS), which enabled various U.S. 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 which 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, Haynor and Flask 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, Haynor and Flask 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.

Parker faces a maximum sentence of five years in prison and a $250,000 fine. If convicted, Haynor and Flask face a maximum sentence of eight years in prison and a $500,000 fine.

An indictment is merely a formal charge by the grand jury. Defendants are presumed innocent unless and until proven guilty in U.S. district court.

John A. DiCicco, Acting Assistant Attorney General of 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. Acting Assistant Attorney General DiCicco also thanked the IRS-Criminal Investigation agents who investigated the case, as well as Tax Division Trial Attorneys John E. Sullivan, Richard M. Rolwing and Joseph A. Rillotta who are prosecuting the case.

http://www.justice.gov/opa/pr/2009/December/09-tax-1292.html

Tags: criminal investigation, corporation,