A Virginia investment firm officer who thought he found a creative way to defraud the IRS was sentenced to 54 months in prison yesterday for implementing a fraudulent tax shelter for KPMG clients.
Michael Parker, chief operating officer of TransCapital
Corp., promoted and implemented from 1998 through 2006 a tax shelter called the
Sale Leaseback of Tenants Improvements Strategy (SLOTS), ultimately helping
client corporationss to deduct more than $240 million from their corporate
income tax returns.
Parker, working with others, formed single purpose entities
to buy leasehold improvements from the SLOTS clients. These leasehold
improvements were appraised in such a way to reflect a higher value on the
clients’ books than the sale price.
Parker admitted that he conspired to defraud the IRS and
withheld information about the transactions from his clients. At least eight
SLOTS shelters were transacted for corporate clients. The Kroger Co. was
identified as having done the largest transaction, claiming over $178 million
in deductions.
Parker said the SLOTS transactions were simply devices to
conceal financing deals. Schemes to
manufacture deductions continue to be a high-risk-shelter strategy.
