IRS Investigating Irvine Investment Firm That Sold Farming Tax Shelter Programs
The Internal Revenue Service is investigating an Irvine investment firm in what a federal agent describes as one of the largest criminal tax fraud probes in U.S. history.
In an affidavit filed to obtain a search warrant on the offices of Amcor Capital Inc., IRS Special Agent Wilbur Goolkasian alleges that the case involves $1 billion in fraudulent deductions.
He said the deductions were taken by about 4,000 investors throughout the country who have pumped $356 million into various Amcor tax shelter investment programs since 1981.
The affidavit alleges conspiracy to commit tax evasion and aiding and assisting in the filing of fraudulent tax returns, but it is unclear whether individual investors are suspected of tax fraud or whether the probe centers only on Amcor. IRS agents declined to comment on the case.
The IRS has been cracking down on tax shelters for several years and has uncovered a number of large frauds. But one federal agent who asked not to be identified said a $1-billion case would be one of the biggest ever.
Amcor President George L. Wright, in a telephone interview Monday, denied the allegations. He also called the dollar amounts cited in the affidavit “substantially overstated” and said that if any civil or criminal charges are filed against the company “we will vigorously defend ourselves.”
But Wendell L. Davies, an attorney in Amarillo, Tex., said in an interview that former Amcor President George L. Schrieber and an Amcor attorney, Ted R. Frame, personally represented to him that the investments were intended to enable investors to claim massive deductions for agricultural expenses that the partnerships did not, in fact, incur.
Davies represents a group of Amarillo-area farmers who participated with Amcor in a series of deals in which they signed phony land-lease and farming agreements. Davies obtained immunity from prosecution for his clients in return for their testimony.
He said he brought the case to the U.S. attorney’s office in May, 1988, before the IRS began its criminal probe.
Davies said Monday that IRS agents videotaped one meeting he had with Schrieber and Frame last year in which the two men went through his clients’ files to remove documents they did not want IRS investigators to see.
The attorney said he wore a tape recorder at another meeting in which Frame and Schrieber outlined the entire scheme and Frame referred to it as “a tax gimmick.”
Schrieber, a Villa Park resident, could not be reached for comment. Wright said Schrieber left the company in April “to pursue other interests.”
Frame, in a telephone interview from his offices in the San Joaquin Valley farming town of Coalinga, said his lawyer advised him not to comment on any specific part of the affidavit.
“But I can say overall that the conversations reported by the affidavit are inaccurate and mischaracterized,” Frame said.
Wright said Amcor officials had no knowledge of any IRS investigation until IRS agents served the search warrant in March and seized numerous files and records.
The search warrant affidavit was ordered sealed by a federal court judge in Los Angeles and was not made public until late last week.
Amcor is the successor of a privately held firm called American Agri-Corp., which was founded in 1981 to sell interests in agricultural limited partnerships.
Farmers Never Saw Money
According to Goolkasian’s affidavit, the company has marketed interests in at least 192 limited partnerships and corporations that have acquired or leased farmlands in California, Texas, Oregon and also in Mexico. Wright said the company also has farming interests in Georgia.
The affidavit said Amcor signed 119 separate farming agreements with Davies’ clients between 1982 and 1988. The agreements provided that the farmers would grow farm crops for the limited partnerships, but the farmers said it was understood that no crops would in fact be grown, according to the affidavit.
Amcor allegedly funneled more than $100 million in and out of bank accounts established for those agreements. However, the farmers never saw any of the money and received a payment of about $2 per acre for signing the pacts, Davies said.
Even as the IRS presses its civil and criminal investigations of Amcor and its various officers and subsidiaries, the company--which went public in December in a reverse acquisition of a shell corporation--is seeking Securities and Exchange Commission authorization to sell 600,000 new shares of stock on the over-the-counter market.
Amcor has also applied to the National Assn. of Securities Dealers, the group that regulates the over-the-counter market, for listing of its stock on the NASD automated quotation system, NASDAQ. Such a listing would make the stock--now only sold by a few independent brokers called market makers--widely available.
Wright said he does not know how the IRS investigation will affect Amcor’s secondary stock issue or its NASDAQ application.
