Arizona man pleads guilty to 7-year, $50M tax fraud scheme

An Arizona man pleaded guilty Tuesday to a seven-year, $50 million solar power tax fraud scheme that defrauded more than a thousand taxpayers around the U.S., including several Washingtonians.

According to U.S. Attorney Nick Brown's Office, 56-year-old Charles St. George Kirkland pleaded guilty to three counts of aiding and assisting the filing of false tax returns.

Kirkland is accused of claiming $135 million in false losses from investing in solar equipment, then selling these losses through a network of tax preparers. Kirkland allegedly told tax preparers their clients could use these losses to claim refunds on their tax returns. The scheme ran from 2012 to 2018.

In all, the U.S. Treasury was defrauded of $50 million, and Kirkland reportedly pocketed some $45 million.

"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."

Kirkland's plea agreement acknowledged he claimed both net operating losses and investment tax credits by vastly overselling his solar power investments. In 2013, Kirkland's businesses spent roughly $150,000 on solar equipment that year, yet he claimed on his taxes that his businesses lost $40 million.

During the course of his seven-year scheme, Kirkland allegedly claimed to have lost more than $135 million on investments, yet actually spent under $6 million.

The next part of the scheme saw Kirkland falsify tax documents for tax preparers, according to court docs, allowing clients to amend their tax returns by claiming losses from Kirkland's companies. The taxpayers then agreed to pay back 90% of their tax refund from the IRS to Kirkland.

The U.S. Court of Seattle found around 1,500 taxpayers were involved in the program, filing nearly 3,200 tax returns.

Victims include a couple in Maple Valley who claimed a $347,893 net operating loss and were refunded $17,759, a Seattle couple who were refunded $28,180, and a Grapeview resident who got a $10,704 refund.

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According to the plea agreement, Kirkland must pay $51.6 million in restitution and will be sentenced April 17, 2023.

The U.S. Attorney's Office says each of Kirkland's charges are punishable by up to three years in prison and either $250,000 or twice the tax gain or loss from the crime.