Prosecutors in Florida have secured a victory in a tax-scam case against a construction company. The two sides reached a settlement worth $5.2 million. In the case, five partners backed a firm that inflated tax credits by inflating the costs of projects. Those five partners were uncharged in the scam.
The construction company, based in South Florida, was accused by prosecutors of inflating the cost of housing projects for residents with low income. The construction company, called DAXC, is now out of business. All five of the company's partners avoided federal charges in exchange for paying the settlement to the federal government. The settlement payment resolved the case using a deferred prosecution agreement.
One of the five partners involved in the scheme led the company, which was also affiliated with the Pinnacle Housing Group, based out of Miami. DAXC was formed by Pinnacle in 2009. Not long after it was formed DAXC qualified for low income housing tax credits from the Florida Housing Finance Corporation.
The credits were issued for DAXC to build four apartment complexes for tenants with low income. Three of the apartment complexes were to be built in South Florida and one complex was to be built in Central Florida. The locations were to be Cypress Grove in Winter Haven, Vista Mar in Miami, Orchid Grove in Homestead, and Avery Glen in Sunrise.
According to the deal with the prosecutors, the five partners from DAXC were to pay a $1 million fine to the federal government, $800,000 in fees for the construction and development of the four projects and $3.4 million in inflated federal tax credits.
Pinnacle released the following statement: "Recently, the federal government contacted Pinnacle about DAXC, and indicated that profits generated by DAXC on these four developments were unwarranted. Upon learning of this, DAXC voluntarily returned the profits along with a fine, thus concluding the inquiry."
An experienced class actions attorney can answer all of your construction litigation questions in Melbourne, Florida.
Source: The Real Deal, "Prosecutors win $5.2M settlement in construction tax-scam case," March 11, 2017