The Conspiracy Grows


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

Personal Liberty

US~Observer Staff

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