Please E-mail suggested additions, comments and/or corrections to Kent@MoreLaw.Com.
Case Number: 2:23-cr-00005
Judge: John H. Chun
Court: United States District Court for the Western District of Washington (King County)
Plaintiff's Attorney: United States Attorney’s Office in Seattle
Description: Seattle, Washington criminal defense lawyer represented Defendant charged with an eight-year tax fraud scheme that resulted in more than $50 million in illegal tax refunds.
Charles St. George Kirkland pleaded guilty in January 2023 to three counts of aiding or assisting the filing of fraudulent tax documents. At the sentencing hearing, U.S. District Judge John H. Chun rejected the defense request for a sentence of home confinement, commenting that Kirkland’s fraud was “a massive tax fraud scheme.” Judge Chun said he was struck by the “outrageous nature of the fraudulent scheme” and Kirkland’s “fraudulent and deceitful behavior.”
“This tax fraud scheme is an affront to all the taxpayers who honestly file tax returns and pay what they owe. These funds that Mr. Kirkland stole from the U.S. Treasury could have gone for infrastructure improvements, social services, and other programs aimed at community safety,” said U.S. Attorney Brown. “This is a significant sentence, and an example of the price to be paid for such dishonesty and deceit.”
According to records in the case, Kirkland falsely claimed in tax filings that he had lost more than $135 million by investing in solar equipment. Kirkland then “sold” those made-up losses to taxpayers through a network of tax preparers, telling the preparers that their clients could use Kirkland’s losses to claim refunds on their own tax returns. Taxpayers would file amended returns claiming that, because of the losses transferred from Kirkland, they were entitled to a refund of all the tax payments they had made in a prior tax year. After receiving the fraudulent refunds taxpayers paid 90% of the proceeds to Kirkland.
Taxpayers participating in Kirkland’s program filed nearly 3,200 fraudulent tax returns. In all, Kirkland’s scheme resulted in a loss to the U.S. Treasury of over $50 million. Kirkland collected $45 million.
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.
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.
Kirkland owes $51,615,484 in restitution in addition to the $1 million fine imposed by Judge Chun.
Two days after agreeing to plead guilty, Kirkland and his wife began a divorce proceeding. In the proceeding, they agreed the wife would take ownership of approximately 100 parcels of real estate, five Tesla automobiles and the couple’s 10,000 square foot home in Arizona. Prosecutors noted in their filings that the government will continue to pursue the assets in order to satisfy the restitution obligation.
In asking for the nine-year sentence, prosecutors wrote to the court, “This is by far the largest loss in a tax case in this district in least a dozen years. Kirkland’s brazen fraud, his long history of professional misconduct, and his efforts to keep the stolen money make clear he will continue to engage in fraud as long as he is permitted to do so.”
“This sentence is a win for American taxpayers! All of Mr. Kirkland’s schemes served the sole purpose of making him very wealthy, and he cared little for those he manipulated,” said IRS Criminal Investigation Seattle Field Office’s Assistant Special Agent in Charge Carrie Nordyke. “The IRS relies on taxpayers to file accurate tax returns. If you observe something suspicious, go to IRS.gov and report it.”
The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI).
The case is being prosecuted by Assistant United States Attorney Seth Wilkinson.
Aiding or Assisting the Submission of False Tax Documents - 26:7206(2) and 18:2
Outcome: As to Counts 1, 2, and 3, the defendant is committed to the custody of the Bureau of Prisons for a total term of 108 months. Upon release from custody, defendant is subject to 3 years of supervised release with the standard and special conditions as set forth in the judgment. $300.00 special assessment imposed; $1,000,000.00 fine; restitution in the amount of $51,615,484.00.