Business news from the Fredericksburg region.
Stafford site sold for $700,000
BY CATHY JETT
Land in Stafford County that was connected to a fraudulent tax-shelter scheme involving a cemetery will be sold for $700,000.
That was Harry Hurley’s winning bid at a foreclosure auction Monday in front of the Stafford Circuit Court building for four parcels of mostly agriculturally zoned land totaling nearly 93 acres at the corner of Enon Road and Wyatt Lane off U.S. 1.
Hurley, who owned the note on all four parcels with his wife, was one of three bidders. He has been speaking with a group about developing it as a cemetery, said H. Glenn Goodpasture, a Fredericksburg lawyer and the foreclosure trustee.
The property, which has been known as Sunrise Lake Memorial Garden and the George Washington National Memorial Cemetery and Garden, is mostly an open field, and it’s not clear how many, if any, bodies are buried there.
The tax-shelter scheme involved the sale of millions of dollars’ worth of fraudulent income tax deductions from charitable donations of cemetery sites, according to the U.S. Attorney’s Office for the District of Maryland.
Individuals invested in a partnership called Heritage Memorial Park Associates that would entitle them to a tax benefit substantially larger than the investment.
In the late 1990s, more than three dozen investors paid more than $2.3 million to buy about $10 million in tax deductions. The investment funds were used to buy rights to be buried at Sunrise Lake, and Heritage Memorial Park in Waldorf, Md.
The plots were donated to charity at substantially inflated values, leading to tax returns being filed by the individual investors in the late 1990s with fraudulent deductions based on the false partnership returns.
The conspirators also falsified the investors’ holding periods so they would qualify for the tax deductions, and failed to report the income they themselves received from the partnership.
Among the conspirators were two Fredericksburg-area residents, Glendle R. Johnston, who was 68 at the time, and John Hardy Ross, then 61. Both pleaded guilty in federal court to conspiracy to defraud the U.S. Treasury Department.
Johnston was sentenced to 37 months in prison, followed by three years of supervised release for conspiracy to defraud the U.S. Treasury Department in same scheme.
Ross was to have been sentenced on Aug. 22, 2007, but it is not clear if he was. In addition, he was named in a Virginia State Corporation Commission securities violation case that is still pending.
Hurley had to deposit $35,000 after Monday’s auction, and he and his wife must pay the balance within 20 days, according to the official notice of sale that ran in The Free Lance–Star. In addition, just under $112,000 in back taxes is owed on the property.
—Reporter Bill Freehling contributed to this article.
Cathy Jett: 540/374-5407