Mastermind of Phony Tax Shelter Scheme Sentenced - Los Angeles Times
Advertisement

Mastermind of Phony Tax Shelter Scheme Sentenced

Share via
TIMES STAFF WRITER

An Encino man was sentenced to seven years in prison and ordered to pay $6.7 million in restitution to victims of a fraudulent tax shelter scheme involving historic buildings, the U.S. attorney’s office said Tuesday.

Mark Roy Anderson, 36, was sentenced Monday by U.S. District Judge Dickran Tevrizian after pleading guilty to two counts of mail fraud in a scheme in which he raised about $47 million from 1,500 investors between 1983 and 1986, said Jean A. Kawahara, the assistant U.S. attorney who prosecuted the case.

Through his Beverly Hills-based company, Marlin Properties, Anderson oversaw a network of 20 limited partnerships that promised investors federal tax benefits in return for money invested in rehabilitating historic buildings, Kawahara said. But instead, Anderson lied about tax benefits, misused investors’ funds and covered up the fact that the historic properties were not being developed as promised, she said.

Advertisement

“He raised a lot of money to buy and refurbish, but ultimately he didn’t do either,” Kawahara said.

The charges he pleaded guilty to involved more than 300 investors who put money into three limited partnerships organized to buy and refurbish the Carnegie Mansion in Millbrook, N.Y.; the Firestone Building in Kansas City, Mo., and the Fox Theater in Oakland, Kawahara said.

After collecting nearly $7 million to buy and refurbish the properties, Anderson never followed through with his plans, she said, and investors were unable to write off their investments because the work was insufficient to be in compliance with Internal Revenue Service guidelines.

Advertisement

“There were some minimal repairs done, but nothing to justify his tax write-off,” Kawahara said. “Nobody ever got any tax write-offs out of these. They were all rejected by the IRS.”

Anderson lied to investors about progress on the projects, giving them the impression that he had done more work, she said.

Anderson was originally indicted March 7 on 30 counts of mail fraud involving more than 20 properties, Kawahara said. On April 12, he pleaded guilty to two counts of mail fraud, she said, adding that there was little to be gained by going forward with all the charges.

Advertisement

In order to pay off creditors from earlier transactions, Anderson kept forming unrelated new partnerships, Kawahara said. “He would use money from later partnerships to pay off earlier partnerships,” she said.

There are also several civil suits pending against him, she said, but she could not provide details.

Despite the court-ordered restitution, Kawahara said, “It’s very problematic that these investors will ever see their money” because his company had few assets and did not control the properties.

“He was moving all of this money around and ultimately lost it all,” she said.

Advertisement