Utah-based shelter operators plead guilty

Operators of a fraudulent Utah-based tax shelter that offered benefits for leasing thoroughbred mares pleaded guilty today to conspiracy to defraud the United States, federal officials announced.

The defendants, David Plummer, Spencer Plummer and Terry Green, marketed a tax benefit for people investing in thoroughbred horse breeding, called Mare Lease Program. Investors in the program filed tax returns with the IRS claiming tax deductions of more than $500 million, resulting in a more than $200 million tax loss to the federal government, according to a U.S. Department of Justice press release. The defendants operated the program through a company called ClassicStar LLC.

Investors were told they could take deductions on their federal income tax returns for the losses generated by the thoroughbred horse breeding operation through the program, federal officials said in the press release.

The deductions provided investors with tax refunds, which were fraudulent, partially because the program used fraudulent loans to finance the leasing of thoroughbred mares, which they couldn't supply.

"Tax crimes hurt everyone by depriving the Treasury of funds needed for important government programs. This nationwide fraudulent scheme is by far the largest criminal tax case in the history of Oregon, and we are grateful for the assistance of the Internal Revenue Service in the investigation of this case," said Acting U.S. Attorney Kent Robinson.

Officials also said the operators made investors believe their loans were financed, when in fact money was transferred back and forth between various investments to conceal a lack of funds.

"The IRS uses all its investigative tools to uncover abusive tax schemes designed to create fraudulent deductions for investors," said Eileen Mayer, chief, IRS Criminal Investigation. "Investment schemes that seem too good to be true should be a signal to investors to stay clear. The IRS is actively pursuing promoters as well as investors who knowingly participate in these types of tax avoidance schemes."

The case was investigated by special agents of the IRS Criminal Investigation and is being prosecuted by Assistant U.S. Attorney and Senior Litigation Counsel Allan Garten, and Department of Justice Tax Division Trial Attorney Jay Nanavati, according to the press release.

— Lana Groves