A 56-year-old Paradise Valley, Arizona man pleaded guilty today in U.S. District Court in Seattle to a seven-year tax fraud scheme that resulted in more than $50 million in illegal tax refunds, announced U.S. Attorney Nick Brown. Kirkland pled guilty to three counts of aiding or assisting the filing of fraudulent tax documents.
Charles St. George Kirkland falsely claimed in tax filings that he had lost more than $135 million by investing in solar equipment. Kirkland then ‘sold’ those losses through a network of tax preparers, telling the preparers that their clients could use the losses to claim refunds on their tax returns. In all, the scheme resulted in a loss to the U.S. Treasury of over $50 million. Kirkland collected $45 million from the sale of the fake losses.
“Mr. Kirkland capitalized on our need and drive for clean energy, cloaking his fraud scheme in the solar energy space,” said U.S. Attorney Brown. “He vastly inflated his investments in solar, and then sold that fiction to taxpayers. The taxpayers got big refunds, but then paid 90% of the refund back to Mr. Kirkland.”
According to the plea agreement, Kirkland used a web of limited liability entities he controlled to claim both net operating losses and investment tax credits based on fake investments in solar equipment.
For example, in 2013 alone, Kirkland claimed his businesses lost more than $40 million through investments in solar equipment. In fact, the businesses spent only about $150,000 on solar equipment that year. From 2012 to 2018, Kirkland’s companies claimed to have lost more than $135 million on investments in solar equipment. The companies spent less than $6 million on solar equipment over that period.
Kirkland reached out to a network of tax preparers and claimed that he could transfer the tax benefits of his losses to their clients. Kirkland provided participating taxpayers with fraudulent tax documents stating that the taxpayers were partners in Kirkland’s business and therefore entitled to the tax benefits of the business’s losses. Under Kirkland’s program, the taxpayers would amend their returns for prior years to claim they were entitled to a refund for those years because the losses from Kirkland’s companies offset their income and reduced their tax obligations. The taxpayers agreed that, upon receiving a refund from the IRS, they would pay 90% of the refund to Kirkland. Approximately 1,500 taxpayers participated in the program, filing nearly 3,200 tax returns.
Some of the taxpayers who participated in the program were Washington residents. For example, one Maple Valley, Washington couple claimed to be partners in Kirkland’s Solar Farm entity and amended their 2015 tax return to claim a net operating loss of $347,893. The couple got a tax refund of $17,759. In 2018, a Seattle couple claimed a 2017 tax loss from Solar Farm of $22,870 so that they could claim a refund of $28,180.
In 2019, Grapeview, Washington resident claimed a 2018 solar energy credit of $10,341 so she could claim a refund of $10,704.
Under the terms of the plea agreement, Kirkland owes $51,615,484 in restitution. Sentencing in front of U.S. District Judge John H. Chun is scheduled for April 17, 2023.
Each count of aiding and assisting the filing of false tax returns is punishable by up to three years in prison and a fine of $250,000 or twice the tax gain or loss resulting from the crime. Kirkland pled guilty to three counts.
