Three Charged With Conspiracy in SLOTS Tax Shelter Case

Daryl Haynor and Jon Flask have been indicted for conspiracy to defraud the Internal Revenue Service (IRS) and for corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws, the Justice Department and IRS announced. Michael Parker has agreed to plead guilty for conspiracy to defraud the IRS.

According to the indictment, from 1998 through 2006, Haynor, an accountant who was a tax partner at an accounting firm in Tysons Corner, Va., and Flask, an attorney who was a partner at a law firm in Vienna, Va., marketed and implemented a tax shelter called the “Sale Leaseback of Tenant Improvements Strategy” (SLOTS). SLOTS 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.

The indictment alleges that Haynor, Flask, and Parker, the chief operating officer of TransCapital Corporation, a tax-advantaged investments company based in Northern Va., conspired to impede and impair the IRS by making false and misleading statements to IRS agents and attorneys during these audits. The indictment further alleges that tax opinion letters were issued in connection with SLOTS transactions that omitted material facts and contained false and misleading information. Haynor, Flask, and Parker allegedly also concealed certain aspects of the tax shelter transaction from SLOTS clients for the purpose of impeding and impairing the IRS.

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