~ Where the Sun Will Never Set on Our liberty ~
March 21, 2014 by US~Observer Staff
The US~Observer has recently started an investigation into what is obviously a scheme to fraudulently obtain ranchers’ and farmers’ property for nothing or next to nothing by using controversial conservation easements. From what we know so far, the major players in this scheme are the State of Colorado, brokers and land trusts made up of or directed primarily by attorneys. At the time of this writing, the US~Observer believes that the ultimate goal of the perpetrators is to get control of the ranchers’ and farmers’ land, which includes water, mining and development rights.
This process in the State of Colorado concerning conservation easements began in 1999, when the land developers asked certain attorneys to design a State bill that would allow tax deductions and tax credits to be generated in exchange for landowners to donate all or portions of their property to go to conservation easements, reportedly to preserve the land for “ranching, farming, and open space,” thereby preserving natural resources. This bill was introduced at a time when the State enjoyed a surplus of tax revenue.
However, in the mid-2000s and later when the economy began to take a downturn, the State began seeking additional or new tax revenues, even if it meant double-crossing people who had legally and honestly availed themselves of tax incentives offered earlier by the State.
A decade later, the State of Colorado is now on a relentless mission, with the “behind the scenes” help of other entities, to recoup tax credits, plus multiple years of penalty and interest, from landowners who legitimately took advantage of the scheme established by the State Legislature. The ruse the State is using is that the lands that were appraised by “State-licensed” appraisers at the land owner’s expense are actually of zero value. How’s that for pure insanity!
In one case, involving one family and three separate, contiguous conservation easements, the Internal Revenue Service calculated their 2003 conservation easements to have at least 87 percent of their appraised value. But officials within the State of Colorado — particularly the executive director of the Colorado Department of Revenue (CDOR), Barbara Brohl, and State Attorney General John Suthers — are virtually ignoring the IRS. Brohl and Suthers are promoting this insidious injustice, even in light of the fact that the Colorado statutes (2003-2007) identified that the IRS regulations were the only standards that applied to Colorado conservation easements. And they simultaneously argue that statutes enacted from 2008 to 2013 apply retroactively to the “open space” donations made between 2003 and 2007.
Amazingly, Governor John Hickenlooper settled his own personal conservation easements with the IRS in the midst of his gubernatorial campaign, and the CDOR accepted “his” IRS settlement. In other words, it didn’t attempt to monetarily rape and pillage Hickenlooper, like it has approximately 600 ranchers and farmers throughout the State. Go figure! Hickenlooper is Brohl’s boss, and he obviously has great influence over Suthers.
Hickenlooper could have ended the abuse and financial destruction of ranchers and farmers at any time during his tenure of office. But he has remained mute, seeming to enjoy Colorado’s stolen benefits, as well as his enhanced connections to high-dollar interests.
Property owners, financially devastated by their participation in the conservation easement program, have done everything strictly by the book and at great expense:
What the State is doing to them is absolutely unconscionable. And the arguments being used by the State and certain attorneys can be described only as an egregious abuse of power — an outrageous story of David and Goliath.
The US~Observer is preparing an in-depth article on this issue for our April edition wherein we will be naming the main culprits and their true motives.
Anyone with information on Colorado’s conservation easements or any of the players involved is urged to call Lorne Dey at 720-231-2038 or email firstname.lastname@example.org.
April 25, 2014 by US~Observer Staff
This is the first installment of a three-part investigative report from US~Observer. For background, read Conservation Easements: The Rape And Pillage of Landowners.
Imagine you use a licensed tax preparer to file your Federal income taxes, just as you have for the past 10 years. Using standard lawful deductions, you have always gotten some money back or at least reduced your taxes. The economy crumbles and Congress re-writes the tax code. You subsequently receive a letter from the Internal Revenue Service that states you are responsible for paying back all the money you have received over the years (resulting from deductions), plus multiple years’ worth of interest and penalties. Crazy? You would think.
Now imagine that it is a State land scheme you are dealing with and that your property, previously appraised at highest and best use for conservation easement (CE) purposes, has just been revalued by the State (which has no authority to do so) at “zero” and that you are being ordered to repay tax credits legally given to you over the past years, plus penalties and interest. Welcome to Colorado’s CE program. Under the guise of conserving land and natural resources for future generations through CEs, the State of Colorado has abused and bankrupted law-abiding citizens in a bait-and-switch scheme worthy of national attention.
As announced in our last edition, the US~Observer is investigating this “scheme” developed by private attorneys and enacted by the State of Colorado, which lured unsuspecting landowners (farmers and ranchers) into forever encumbering their property with a CE. They did so with the promise that the landowners could legally monetize the development (property) rights of their land. And then many years after the transactions, the State of Colorado reneged on the deal and began its extortion tactics. If a common citizen did the same thing that the State did, it would factually fit the crime of racketeering.
What began as a nefarious strategy for attorneys to obtain Colorado State tax credits for their wealthy clients transformed into an industry through which said attorneys enrich themselves. The process has caused disasters, including bankruptcy; family breakups; and mental, physical and financial despair for unsuspecting land owners and their State-licensed appraisers, who all followed the law.
The alleged architect, Larry Kueter, is a Denver attorney who reportedly persuaded Colorado State Representative Lola Spradley to introduce cleverly designed legislation in 1999 and 2001 that purposely minimized “oversight” in order to provide lucrative benefits to special-interest attorneys, tax-credit brokers and wealthy clients by offering “State tax credits” for Colorado CEs.
The term emerged in the 1950s, with the U.S. Congress passing an amendment to the Tax Reform Act of 1976 providing expressed authority for IRS tax deductions for CE donations. A CE isn’t anything like a traditional easement, where a landowner gives permission for a “positive restriction” to another entity (government, business or individual), which is the right to make limited use of the property for a specified purpose, duration and/or designated sum of money (i.e., a buried pipeline, cable, road access, etc.). Conversely, a CE is a “negative restriction” where the land owner restricts the property from ever being developed (mining, housing, water, etc.). He does so by placing the subject land into an IRS 501 (c)(3)-certified Land Trust, a special nonprofit that is set up to “receive” these donations and to be responsible for monitoring the entrusted land. The landowner records a CE deed (restriction) with the respective county clerk and the CE deed must identify the receiving land trust in order to qualify for the authorized tax deductions. The value of the tax deduction is determined by a qualified appraisal, as identified by the Federal regulations IRS 170(h).
On the premise of preserving “open space” and preserving Colorado’s “natural resources,” Larry Kueter reportedly cleverly manipulated Colorado State legislators to enact a law to generate “State” tax credits, with provisions that land owners (CE donors) could “transfer” (sell) State tax credits to more wealthy individuals. Despite the well-reasoned opposition testimony of Colorado State Representative Douglas Bruce identifying numerous concerns (lack of oversight, qualifications for appraisers, how are “perpetuity” values determined, the Department of Revenue’s inability to monitor or examine appraisals, could CEs be established anywhere 50 miles east of Springfield, Colo., etc.), Larry Kueter reportedly assured the Colorado State Legislature that adding oversight would be cumbersome and that the IRS regulations were self- policing. The legislation passed, with the influential front-range attorneys, land trusts, and tax brokers all elated and ready to rake in lucrative tax deals for their wealthy clients.
Reportedly, those directly benefiting from the CE program include Denver attorneys Larry Kueter and Bill Silberstein,tax credit brokers, attorney Mike Strugar of Strugar Conservation Services LLC in Boulder, Carl Spina of Conservation Tax Credit Transfer LLC and Marty Zeller of Conservation Partners. According to information received, another very questionable individual is John Swarthout, former president of Colorado Coalition of Land Trusts. Curiously, Swarthout recently joined Governor John Hickenlooper’s office, as a “policy adviser” and is reportedly heavily tied to oil companies.
Up to the point of the legislation passing, cash-poor land owners had little to no benefit in using CEs on their property. The legislation, however, gave these struggling individuals a way to monetize their property rights, while keeping it in “trust” for future generations of Coloradans — a seemingly win-win scenario.
The promoters of the CE program obviously failed to foresee the wide acceptance of participation in the CE program by Colorado farmers and ranchers. And some of the promoters conspired to create a mess in order to manipulate control. The control, it turns out, was to discredit (destroy) the legitimacy of any appraisal that did not meet the allegedly unscrupulous promoters’ personal criteria and greedy agenda.
In one of the numerous committee hearings held by the legislature, Carl Spina reportedly asserted that he, as well as any of the tax credit brokers, could determine the validity of any appraisal or easement in a period of 15 or 20 minutes and for any State agency to have that authority would be unnecessary.
The notion that establishing a CE and respective State tax credits was complex was not lost on the land owners; they expended a great deal of money to hire the appropriate professionals to ensure complete compliance (i.e., State-certified appraisers, attorneys, certified public accountants, wildlife biologists, geologists, etc. — see graphic insert below).
When the legislation passed, the State legislators anticipated about $15 million of tax credits to be generated annually, according to the bill sponsors. However, after the land trusts wooed land owners across the State with the “lure” of cash from the sale of tax credits and the good feeling conveyed by the land trusts of doing something for conservation, the State was obligated for more than $265 million in tax credits.
–Ron Lee and Lorne Dey
This is the second installment of a three-part investigative report from US~Observer. For part one, read Colorado’s ‘Legalized’ Theft. For more background, read Conservation Easements: The Rape And Pillage of Landowners.
At the onset (2003) of the impending controversy, now spanning a decade, J.D. Wright (land owner/CE donor of Olney Springs, Colo.), was told by a tax credit broker that his conservation easement (CE) tax credits were unsellable. Wright then called State Representative Spradley, only to be informed that all questions should be directed to Larry Kueter. When Wright inquired of Kueter to find out who in State government he could contact for resolution, Kueter reportedly replied, “No one. We designed it (the legislation) to avoid a bunch of bureaucrats looking over our shoulders.”
According to an appraiser who attended a public meeting in Golden, Colo., Kueter (the influential lawyer and chief architect who developed the Colorado conservation program), told the attendees: “…the program was never designed for the ‘hicks’ who farmed and ranched to the south, it was designed to benefit rich Coloradans like ‘John Elway’ who didn’t have enough deductions to give them tax breaks.”
Something had to be done to get these “hick” farmers and ranchers shut out of the CE program! So the reportedly devious broker buddies devised a plan: scream fraud and attack appraisers! Thus, in 2004, “anonymous” calls were made to The Denver Post claiming fraudulent appraisals of conservation easement properties. Newspaper articles suddenly stirred upper echelons of the State agencies (Erin Toll, director of Real Estate and Roxanne Huber, director of Revenue). The ruse worked!
Suddenly the State agencies were on a mission, although clueless how to handle the allegations of fraud and/or overvalued appraisals. In light of the recession, and the State’s empty coffers, here was an opportunity to jump on the band wagon with allegations of fraud, in an attempt to solve the State’s budget shortfalls.
To coincide with their destructive strategy, in 2003, the “tax credit brokers” reportedly developed a union with well-known appraiser, Mark Weston, who in turn enlisted appraisers, Peter Sartucci, Tim Walter,and Kevin McCarty, for the alleged, explicit purpose to invalidate appraisals and to allegedly slander appraisers John Stroh and Bill Millenski (among other appraisers outside of their group). In fact, a public records request revealed an email, dated July 29, 2004, from Janish Wishman, attorney for Great Outdoors Colorado (GOCO), where Tim Walter responded, “I doubt we can overcome the Caldwell and Brown and Stroh water value report but will try”. This followed a reported Wishman and Stroh confrontation a few days earlier over the value of Lower Arkansas Valley Water. Also at this time, Larry Kueter’s son was the lead attorney for the investment group High Plains A&M LLC, which was involved in speculating on irrigation water shares for resale to front range users. The honest appraised value of a share of Arkansas River water made speculation difficult.
In another instance, Mike Strugar reportedly called a State certified appraiser and complained his appraisals were too high. When the appraiser didn’t buckle, Strugar reportedly blew up. Strugar allegedly went on to threaten the appraiser with, “I’m going to discredit every appraisal you’ve ever done and I’m going on the offensive right now,” and he did.
Subpoenas were issued, newspaper articles written, and a State grand jury was empaneled. It is important to note that no indictments in the past 11 years were ever handed down against any appraiser or landowner. Colorado Department of Real Estate (CDRE) Director Toll eventually resigned under pressure, for making false statements concerning a departmental investigation of “state- licensed” appraisers. According to a “Comment” on Fox 31 KDVR’s site, “Toll is singularly responsible for ruining the lives of countless INNOCENT people, slandering their names and many who, in several cases, never had a complaint filed against them”.
The Colorado Department of Revenue (CDOR) also had a problem. This State agency had no legal authority to examine the appraisals until passage of HB-1244 in 2005. Since the Colorado statutes identified the IRS treasury regulations — IRS 170 (h) — as the only standards, CDOR then asked the IRS to intervene and to review more than 800 CE donations (appraisals). Simultaneously, the CDOR arbitrarily and without any justification sent “Disallowance Notices” to more than 800 land owners, claiming their conservation easements had $0 VALUE.
How can 800 appraisals, completed by a variety of state-certified appraisers, all be wrong? And, how can any land, anywhere, have “$0” value?
State Representative Wes McKinley asked Philip Horwitz and Mark Couch, the spokesmen for CDOR in 2010,”Why are you (CDOR) refusing to accept second appraisals, that have verified the values of the original appraisal and some have even come in with higher values than the original appraisal? — There are some cases, where landowners are on their fourth and fifth appraisals, yet you (CDOR) still refuse to accept them?”
CDOR agents Horowitz and Couch reportedly replied,”We don’t care if a landowner brings us 100 appraisals, if we don’t like them (values), we won’t accept them.”
An exasperated McKinley popped up from his chair, threw off his cowboy hat and exclaimed,”You mean to tell me if I have 100 doctors make the same diagnosis, you wouldn’t believe it?”
Some time later, in a legislative hearing, Couch and Horowitz were questioned about the comment. Reportedly, they both lied and denied it was ever said. However three witnesses — Wes McKinley, and two of his constituents (affected CE landowners) David Emick and Jillane Hixson — did indeed, hear the remark.
Clearly Horowitz and Couch were pushing an agenda; however the following Colorado statue denies Director of Revenue Barbara Brohl (formerly Roxanne Huber) the authority to send those dis-allowance notices without valid proof of her opinion.
Colorado Revised Statute (CRS) § 39-22-103(1) defines the term “assessment” for the purpose of Colorado income taxes in Article 22. An assessment is either “… the filing of the return as to the tax, penalty, and interest shown to be due thereon …” or as it pertains to any deficiency in tax, penalty or interest, assessment “means the mailing or issuance of a notice and demand for payment.” C.C.R. 201-2: 39-22-103.1 clarifies the statutory definition of assessment and also provides that “[a] notice to a taxpayer that the executive director believes a deficiency exists is not an assessment.”
The IRS soon became frustrated with the arbitrary work imposed upon them by the conspiring and incompetent CDOR and for the most part, the IRS accepted the validity and value of land owner’s conservation easements. Incredulously, the CDOR then audaciously refused to accept IRS evaluations even though the Colorado statutes clearly identified the IRS regulations as the only standard.
Eventually, the state legislature appropriated funds for the CDOR to hire review appraisers. These appraisers, whose consultant fees ranged from $7,000 to $15,000 per appraisal, produced CDOR’s (desired-insane) pre-determined outcome of $0 (ZERO) value determinations. This coincided with the brokers’ mission to discredit most, if not all, of the initial values determined by the state-licensed appraisers, who were legally engaged by ranchers and farmers to establish values for their respective CEs.
–Ron Lee and Lorne Dey
May 2, 2014 by US~Observer Staff
Wow - just wow and from the very get go... “…the program was never designed for the ‘hicks’ who farmed and ranched to the south, it was designed to benefit rich Coloradans like ‘John Elway’ who didn’t have enough deductions to give them tax breaks.” and “...We designed it (the legislation) to avoid a bunch of bureaucrats looking over our shoulders.”
1) Wonder if this structure has been set up in other states, say, like Nevada? (I'm sure states have conservation easement laws but, with all the structured fraud included, such as the appraisal fees, then never accepting them, $0 dollars value thing)
2) Where and what was Harry Reid doing in 1999 and 2003?
And then of course, once they got all this set up, guess what was in the way then, cap amount. So in 2010 Ritter fixed that.
Gov. Bill Ritter on Thursday signed House Bill 1197, which sets a statewide limit of $26 million on conservation easement tax credits. The Department of Revenue estimates the bill will save $37 million in the popular tax credit program.
HOLY COW! This is crazy! Our Government has gone wild!
Check this out, Gris!
Obama’s EPA About to Aggressively Expand Authority Over Private Property
Via CNS News:
The federal government would bypass Congress and contradict the Supreme Court to seize jurisdiction over vast amounts of private property, if a new rule is put into effect, 231 congressmen warn in a letter urging the heads of the EPA and U.S. Army Corps of Engineers (USACE) to withdraw the proposal.
The proposed rule would use the Clean Water Act to assert jurisdiction over water on private property, even man-made ditches, the letter warns:
“On March 25, 2014, the (EPA) and the U.S. Army Corps of Engineers (USACE) released a proposed rule that would assert CWA [Clean Water Act] jurisdiction over nearly all areas with any hydrologic connection to go downstream navigable waters, including man-made conveyances such as ditches.”
The current rule gives CWA jurisdiction over only “navigable” waters.
The new rule “aggressively expands federal authority under CWA while bypassing Congress,” the letter warns.
The rule also contradicts past Supreme Court rulings.
Completely scary, isn't it Robin.
It seems to me that the people of Colorado need to have the courts in Colorado issue restraining orders against all the principle players in this outrage. This might give the people time to figure out how to fix it.
This whole thing is really about "free" money -- isn't it?
That 'free' money thing is how Agenda 21 gets into each and every municipality. They offer a grant for certain 'sustainability' efforts. It boggles the mind that people are so ignorant of this. Many who signed on to this are well meaning, but woefully ill informed! Likely, they are running your community. I know they're running mine! Idiots!