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From a tastefully renovated barn in Chadds Ford, a little-known nonprofit has been a leader in protecting open space — and lining up tax breaks for the wealthy.

It’s done it, at least in part, by doing deals that others in the field reject.

But its dealings with one particular donor, Donald J. Trump, threaten to move the North American Land Trust from its rustic Chester County offices into a harsher limelight.

New York’s attorney general has labeled the former president’s $21 million tax deduction for preserving his Seven Springs estate in New York state as part of a pattern of “fraudulent” schemes by which Trump falsely inflated the value of his holdings to mislead the IRS, insurers, and banks. Trump qualified for the tax break under an agreement with the Chadds Ford trust.

The trust’s pact with Trump, under which it agreed to be the custodian of his promise not to develop much of his estate, was one among more than 500 preservation deals it has struck across the nation.

In this region, as The Inquirer has reported, it helped a handful of rich homestead buyers at the Ardrossan estate in Radnor get massive federal tax breaks for “donating” land they alone could access.

NALT’s willingness to test the limits of what the law will allow has drawn it into more legal tussles than its peers. Easement deals involving NALT have been the subject of federal court decisions regarding IRS challenges nine times — more than any other land trust — since its founding in 1992.

The IRS and Congress have recently grown especially alarmed by a new breed of tax break pioneered by the Chester County trust that allows scores of participants to share big savings by buying land, then restricting it from being developed.

These transactions often “involve land valuations that are so inflated above their original purchase prices that they cannot reasonably be characterized as anything other than abusive tax shelters,” members of the Senate Finance Committee wrote.

Earlier this month, federal prosecutors in Atlanta unsealed a 135-count criminal indictment against a Georgia-based accountant and six others whom they accused of engineering $1.3 billion in fraudulent tax breaks over 18 years under such schemes.

”Some of these projects have hair on them,” Steven Carter, NALT’s president, said in an interview last year of past deals involving the group, which no longer participates in syndicated transactions. “Sometimes it has come up to the line, but that’s where we are.”

Still, NALT and other land trusts say they have no control over what value people put on their land for tax purposes.

» READ MORE: How Trump’s real estate ‘charity’ may benefit him

A charity receiving a “donation is not responsible for valuation or for tax matters of the donor,” said George Asimos, an attorney for the group. “NALT does not select the appraiser or certify the value and does not even need to know the value to fulfill its role as easement donee or holder.”

In his 2015 accord with NALT, Trump agreed to place what is called a “conservation easement” on the deed for the Seven Springs estate, forever blocking development on most of the 213-acre property.

In return, NALT signed off on documents that cast the agreement as a donation that qualifies for tax relief under rules made permanent by Congress 40 years ago to preserve open space and save historic buildings.

For three years, New York State Attorney General Letitia James has been conducting an investigation into Trump’s finances, including the tax reductions at Seven Springs.

In January, James said in public court papers that Trump has claimed more of a deduction than he deserved by withholding information from an appraiser who worked on the agreement. As a result of the alleged subterfuge, the value of Trump’s forgone development rights — and therefore the size of his tax break — was falsely inflated, James wrote.

Seven Springs is one of several Trump properties about which the former president has made misleading statements, James alleges in the filings. Among the others is Trump National Golf Club, near Los Angeles, where Trump placed an easement for a $25 million tax write-off that James said was “substantially overstated.”

NALT was not accused of wrongdoing in James’ filings or any other legal actions over deals involving the group.

Under U.S. law regarding tax breaks for conservation deals, land trusts are generally not responsible for vetting the purported values of donations they receive.

Andrew Johnson, who founded NALT 30 years ago and led the organization when the Seven Springs deal was being organized, said in an interview with The Inquirer last year — shortly before his death at age 83 — that he had worked closely with Trump’s son Eric on the conservation plans that underpinned the agreement at Seven Springs.

“I did it with Eric and with the town loving what I was doing, because they were very worried about Donald doing the wrong thing,” Johnson said in the May 2021 interview, referring to earlier plans by Trump for a golf course or dense housing that nearby residents opposed. “I got an opportunity to save land.”

Still, he said, without elaborating: “I didn’t do everything Donald Trump wanted to do.”

Carter, who took over as president of NALT in 2019, has been steering the organization in a more conventional direction, avoiding the controversies that haunt the group’s past.

Carter has also been working to give the group more of a focus on local projects that members of the public can enjoy, such as its Brinton Run Preserve in Chester County. NALT acquired the 72-acre property last year in hopes of making it into its first public preserve.

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Carter recently declined to comment on James’ inquiry. In the interview last year, he said the Seven Springs deal had “all of the qualities of a really good conservation easement providing significant public benefit, similar to all of our easements in our portfolio.”

Bob Lord, a tax lawyer and senior adviser at the Washington-based advocacy group Patriotic Millionaires, said James’ revelations about Seven Springs highlight a weakness in the nation’s rules for awarding tax breaks in exchange for conservation activity.

The rules don’t hold charities who accept donations to account for confirming a property’s value, as they should, Lord said.

“They don’t have any real incentive to dispute the value,” he said. “It would be nice if there were some penalty that these land trusts would have to face if they agree to a value that’s just wrong.”

Tax breaks

The Seven Springs estate sprawls across the town of Bedford and two other Westchester County municipalities, boasting acres of rolling woodland and a 60-room Georgian-style mansion built in 1919 for Eugene Meyer, a banker who later chaired the Federal Reserve, then owned the Washington Post.

Trump’s company acquired the tract in 1995 for $7.5 million, then spent years trying to develop the property as a housing subdivision and golf course amid local opposition and environmental hurdles. By the mid-2010s, Trump’s business had changed course, moving to monetize the land by instead donating a conservation easement covering about three-quarters of the property.

In such easements, property owners sign a pact, usually with a nonprofit conservancy, not to develop all or a portion of their land. For tax purposes, these pacts count as charitable donations to those land trusts under the logic that the owners are giving up something of economic value — development rights — to serve the public good by preserving open space.

» READ MORE: Open Space, Closed Gates Tax reductions were on offer to buyers in exchange for protecting the land. But the public cannot enter.

Under IRS rules, easements are worth the difference between a property’s appraised value before and after the development restrictions the owners agreed to. So, the more a property is said to have been worth before the restrictions — say, as a development site for expensive homes — the bigger the tax write-off.

In the case of Seven Springs, Trump representatives used an appraisal that the real estate firm Cushman & Wakefield completed for the site after being provided with plans that showed the property being carved up into 24 homestead lots. Based on that development potential, the Seven Springs property had a value of $56.5 million, the appraisers determined. With the easement, the property was appraised as being worth much less, resulting in the $21 million deduction for the donation.

But the plans that Trump and his family gave Cushman & Wakefield were misleading, James alleged.

Limitations on the land, including ones contained in Trump’s development agreement with the town of Bedford, meant that it could only be subdivided into 10 lots, not 24, which “would have reduced the value reached by the appraisal by as much as approximately 50%,” James wrote in the filing.

The appraisal “provided ... to the North American Land Trust” relied “on questionable assumptions indicating misrepresentations and significant omissions,” James wrote.

Last month, a judge found that James had already uncovered “copious evidence of possible financial fraud,” evidence that gave her a legal right to question the Trump family.

Trump said in a statement that there was “no case.”

“I can’t get a fair hearing in New York because of the hatred of me by judges and the judiciary,” he said.

A tax deduction does not work out to a dollar-for-dollar reduction in what a person owes the IRS. Instead, the deduction amount is subtracted from the amount of a person’s income that can be taxed.

The Seven Springs deal and the one involving his California golf course enabled Trump to pay a total of about $5 million less in federal taxes than he would have otherwise owed between 2014 and 2018, James wrote.

Andrew Johnson, the North American Land Trust founder, said in last year’s interview that representatives of James’ office had interviewed him — “a nice chat,” as he put it — in 2018 as part of their investigation into Trump’s businesses.

NALT received $32,000 from Trump to fund its management of the easement at Seven Springs, according to court papers filed in a separate challenge to Trump’s business by James’ predecessor.

The Trump Organization did not respond to questions from The Inquirer regarding why NALT was selected as recipient of the Seven Springs easement.

Johnson said NALT’s involvement in the Seven Springs easement had been limited to making sure the deal served a legitimate conservation purpose, and that it played no role in determining its financial value.

“The land trust can’t control the appraiser,” he said.

That shouldn’t let NALT off the hook, said John Echeverria, a professor of property and environmental law at Vermont Law School.

While the laws around tax breaks for conservation deals are intended to compensate property owners for their donations, donors were never meant to be able to profit from the agreements by getting more back in tax relief than they paid for their properties, Echeverria said.

But NALT appears to have built its business in part around deals that enable landowners to do just that, he said.

“The transactions that NALT is involved in seem to involve efforts to actually make a net profit on conservation easements,” Echeverria said. “Certainly the filing by the attorney general indicates that’s what Donald Trump was up to.”

Pushing the envelope

Johnson characterized the Seven Springs easement as “one of the best things we ever did.”

That’s a bold statement coming from Johnson, whose organization had signed easement deals covering some 136,000 acres, making it one of the biggest land trusts in the country.

But it’s also one of the most controversial.

Time and again, NALT has found itself involved in deals that appear designed to maximize tax breaks and other benefits for wealthy property owners and investors, rather than its stated mission of guarding natural lands. That is reflected in the nine IRS cases against defendants whose easements are held by the trust that resulted in court rulings.

“It indicates that they are kind of pushing the envelope on conservation-easement drafting,” said Nancy McLaughlin, a University of Utah law professor who is a leading expert on easements and tracks IRS litigation involving them.

One of those suits concerned Balsam Mountain Preserve in North Carolina, which resident Andie MacDowell — the actress — praised in a YouTube video for its top-notch golf course, its accommodations for her horses, and its “very nurturing” staff.

The IRS won its suit against the owners of the Balsam Mountain land, with a judge ruling in 2015 that their pact with NALT didn’t qualify for a tax break because the nonprofit let them reserve the right to rejigger the borders of the land that had been placed under easement.

In another case, an appeals court in 2018 backed the IRS when it rejected the size of the tax break for an easement sought for a 242-acre golf course near Hilton Head, S.C. The owners put a $15 million value on their easement donated to NALT, but the IRS said it was worth only $100,000.

But often, judges have let the tax deductions stand, and, in the process, making precedent-reversing “decisions that are gutting safeguards that are protecting the public interest,” McLaughlin said. In some cases, these decisions adopt arguments advanced by NALT itself via friend-of-the-court briefs submitted by its lawyers.

In one such example, owners of an unprofitable golf course designed by the Big Three of Golf — Gary Player, Jack Nicklaus, and Arnold Palmer — near Augusta, Ga., claimed a $10.4 million charitable deduction for donating an easement over the 349-acre property to NALT in 2010.

The IRS rejected that deduction, saying the owners overstated its value as habitat for endangered animals and plants and that it didn’t provide adequate scenic enjoyment to the public, since it was private property viewable only by boaters on an adjacent river.

In 2020, however, an appeals court reversed a Tax Court decision that concurred with the IRS, agreeing with the main thrust of a brief filed by NALT that the lower court had been overly stringent.

One member of the three-judge panel, Britt Grant, partially dissented. She said the course’s upkeep involved environmentally degrading practices that undercut owners’ claims that the deal protected valuable habitat.

These practices included the use of fans to keep the private course’s non-native grasses from wilting in the sun; herbicides, fertilizers and other chemicals that sometimes required gloves and respirators to handle; and a drainage system that channels the chemicals into nearby ponds, creeks, and wetlands, Grant wrote.

“With the chemicals, imported grasses, large fans, artificial drainage, and water pumping, it is not at all clear that the easement amounts to a ‘relatively natural habitat,’” she wrote.

Compliant appraisers

While tax breaks via easements are often sought by the uber-wealthy, NALT was a key participant in a movement to shop them to the merely rich.

This is the practice of selling increasingly controversial land ventures known as syndicated conservation easements, which were the target of the Senate Finance Committee probe in 2020 that labeled the deals as abusive.

Under the schemes, promoters buy vacant land, then draw up plans to develop that property into luxury houses or other real estate ventures. Too often, they pay little regard to whether there’s truly enough market demand to sustain those projects, according to the Senate’s 151-page report.

The promoters then enlist a compliant appraiser to assign a value to the property — generally an overstated one — based on the supposedly lucrative development plans. Following that, investors are recruited to buy into partnerships that assume ownership of the land.

The final step comes when those partnerships sign easement deals with land-conservation nonprofits in which they give up the right to build the theoretical real estate projects, qualifying their members for tax breaks.

Thanks to the outsize appraisals, the investors often end up recouping twice as much or more in tax savings as they paid for their stakes in the landowning partnerships, “with promoters pocketing millions of dollars in fees for organizing the deals,” according to the report.

Syndicated conservation easements lopped a collective $10.6 billion off investors’ tax bills between 2010 and 2017, according to the report.

IRS Commissioner Charles Rettig told the committee last year that 28,000 taxpayers were then currently under examination over conservation easement investments and that the agency had challenged $21 billion in tax deductions claimed through the deals between 2016 and 2018.

In January, the agency announced plans to hire up to 200 additional attorneys to help combat tax schemes, syndicated conservation easements chief among them.

NALT isn’t mentioned by name in the text of the finance committee’s report, but its shadow hangs over the investigation through its work with an Atlanta-based company called EcoVest Capital, referred to in the report as “one of the nation’s most prominent syndicators of conservation-easement transactions.”

All of the transactions engineered by EcoVest in the committee’s report involved NALT as the recipient of a conservation-easement donation. They included a nearly 120-building housing complex in North Myrtle Beach, S.C., near what the report’s authors quipped was “a unique neighbor,” a wastewater-treatment plant.

An easement over the 270-acre tract was granted to NALT in 2015 with a value as a development site of $48 million, assigned by Alabama-based appraiser Claud Clark III. The donation occurred less than four months after a consortium of 80 investors took ownership of that land in a deal that valued the property at just $4 million.

The donation allowed the investors to cut their tax bills by an estimated total of $16 million, according to the report. EcoVest earned $1.48 million in fees from the deal, the report’s authors calculated, based on a company disclosure. NALT was paid $30,000 to look after the easement.

In 2019, Clark surrendered his appraisal license in Alabama rather than challenge a complaint against him by that state’s real estate appraisers board that accused him of “willfully disregarding real-estate appraisal standards” in his valuation of another conservation easement. That Alabama transaction did not involve EcoVest or NALT.

EcoVest and Clark, however, are both defendants in the Department of Justice’s main civil investigation of syndicated-easement-transaction organizers.

The Justice Department sued Clark, EcoVest, and three of EcoVest’s current and former executives (one of whom has since settled) in 2018, accusing them of peddling deals amounting to the “thinly veiled sale of grossly overvalued federal tax deductions under the guise of investing in a partnership.” Together, the defendants created $3 billion in tax deductions through 138 syndicated easements, prosecutors said.

NALT is not identified by name in the complaint, but prosecutors in building the case against EcoVest and the other defendants subpoenaed the Chester County nonprofit for records involving nearly 140 business entities involving easements, documents show.

At least two of those easements accepted by NALT are subjected to detailed criticism in the civil suit.

The Justice Department seeks to bar EcoVest and the others from organizing partnerships that syndicate investors for conservation easements. It also wants it to disgorge money earned through past schemes.

EcoVest and its executives responded in court papers that they “went to great lengths to ensure that all of their projects fully complied with the law” and that their projects have “helped to preserve in perpetuity nearly 20,000 acres of undeveloped property, including forests, meadows, wetlands, streams, and coastal plains.” Clark denied that his appraisals contained overvaluations and called the government’s allegations “sweeping and unfounded.”

‘A barren wasteland’

NALT also makes a cameo in the 99-page criminal indictment unsealed last week against Atlanta-area accountant Jack Fisher, who was accused in U.S. District Court in Georgia of arranging “illegal tax shelters” that “facilitated high-income taxpayers in claiming unwarranted and inflated charitable contributions.”

Fisher and an attorney he worked with used two handpicked appraisers who are also named as defendants to generate appraisals of conservation easements. They often valued the transactions at amounts at least 10 times higher than the price that was actually paid to buy into the deals, prosecutors alleged.

Government lawyers describe how Fisher advised an undercover investigator, “[w]e know that if we’re examined by the [IRS], they will ask for all promotion materials, so you have to be very, very careful that these look like real estate investments as compared to, you know, basically a tax shelter.”

One of the land trusts that accepted easements through Fisher’s operation — identified as “Land Conservancy 2″ — was described as a “nonprofit organization, founded in Pennsylvania” and named among the “relevant individuals and entities” in the case.

Property records where these easements are filed confirm that this group is NALT.

The indictment outlines eight deals in seven states over little more than two years in which NALT was granted an easement by a land venture set up by Fisher.

One 2018 easement donated to NALT covered three-quarters of a 1,090-acre desert tract in Nevada that had been purchased for $3 million, according to the indictment.

The easement was valued at $52 million based on an appraisal that described the property as a development site for 199 houses — though the area’s zoning allowed only 25 homes, prosecutors wrote.

In a July 2018 email to two associates cited in the indictment, Fisher expressed some concerns about how realistic the development of the desert site might look to authorities if the plan were given a close look.

“We need to come up with a plan for the water,” Fisher wrote. “If this is examined, it will not look good to see this as a barren wasteland.”

Two Atlanta-area brothers, both accountants, pleaded guilty in 2020 to fraud in connection with some of Fisher’s deals. Corey and Stein Agee had been accused of promoting the easement deals and, in some cases, preparing fraudulent tax documents to mislead the IRS about when the transactions occurred. It was the first prosecution over such syndicated deals.

NALT accepted easements involving projects that the Agee brothers had worked on, the indictment shows. Stein Agee, for example, was accused of filing IRS forms that “fraudulently claimed” a deduction in the Nevada easement.

Along with the Chadds Ford nonprofit, the indictment also cites the role of another conservancy, one based in Georgia, and says that two of its leaders were unindicted “coconspirators.” It notes that one held dual roles — as a head of the conservancy and as a top executive with the Fisher firm that sealed easements deals with it.

Fisher attorney Russ Ferguson said Thursday that his client looks forward to defending himself in court.

“Through a congressionally-authorized and IRS-approved tax deduction to encourage conservation, Jack Fisher has conserved nearly 10,000 acres of developable, natural land,” Ferguson said. “Mr. Fisher has not only followed the law, but has acted in conformity with IRS regulations, agency guidance, and audit guidelines.”

The Land Trust Alliance, the Washington, D.C.-based standard-setting group for conservation trusts, bars its nearly 1,000 members from accepting easements bought less than three years earlier in which the value is put at more than 2½ times the purchase price.

The rules reflect criteria outlined in an IRS notice that requires participants in such deals to submit details to the agency so it can vet whether they have overstated appraisals or have inadequate public benefits.

The Land Trust Alliance has backed legislation that would prohibit tax deductions from such deals outright, effectively banning syndicated easements.

NALT is not a member of the group.

During last year’s interview, NALT founder Johnson took credit for teaming with EcoVest in the mid-2000s to help pioneer syndicated easements. His objective had been to preserve more land by increasing the ranks of those who might benefit from tax breaks for conservation beyond people who already own big swaths of land.

“I created it,” he said of the practice. “I decided that one of the targets had to be these large land holdings that were destined for golf course communities.”

Johnson retired as president of NALT in 2014, passing the reins to a naturalist named Stephen Johnson (no relation), who led the organization for the next five years. Steven Carter, a longtime NALT staffer and officer, became the group’s leader in 2019.

Under Carter, there have been changes, including a vote soon after he became president to no longer participate in syndicated deals.

“The IRS and the government is frustrated and wants to stop this thing,” Carter said. “So it makes no sense for us to carry on in that way.”

Another hallmark of his tenure, Carter said, has been a pivot toward nature-conservation projects closer to its Chester County home, specifically ones that allow for public access.

Last spring, the group bought the Brinton Run property on Oakland Road in Chadds Ford from a private seller with the nearly $4 million it raised from donors and government sources. It aims to open the property for public visits this year as Brinton Run Preserve.

“It is a new day over here, and we are trying to do things a little bit different,” Carter said.