Appraiser Pleads Guilty in $1.3B Fraud Scheme

An appraiser in North Carolina is set to face the music after conspiring in a massive $1.3 billion tax fraud scheme.

Last week, Walter Roberts II pleaded guilty to conspiring to defraud the United States, the Department of Justice announced. Roberts faces a maximum of five years in prison and will be sentenced in six months.

The fraud started in 2008, one year after Roberts became a licensed appraiser, according to court documents and statements. In 2007, he started appraising conservation easements, which are specified areas of land earmarked for environmental conservation. Owners with conservation easements can claim an income tax deduction.

From 2008 to 2019, Roberts fraudulently inflated the value of at least 18 different easements by violating industry norms and making false statements. He also manipulated or used manipulated data to hit a target appraisal value communication by unnamed co-conspirators to achieve a certain tax deduction.

The impact of the fraud is staggering, especially since Roberts inflated the value of some appraisals by at least 70 percent. The 18 easements identified led to claims of nearly $467 million in tax deductions. The IRS recorded a tax loss of greater than $129 million as a result.

This kind of scheme isn’t unprecedented, though. A couple of years ago, two brothers working at an Atlanta accounting firm pleaded guilty to federal tax fraud conspiracy charges for running an operation allegedly involving green space conservation deductions that cheated the IRS out of $250 million.

Oversight of the appraisal industry is tricky, as an appraiser’s work is often linked to subjective factors. In residential real estate, there is a persistent appraisal gap between home values in white neighborhoods and communities of color, which worsened during the pandemic.

The Biden administration has called for clearer guidance to appraisers on anti-discrimination laws and for stronger enforcement of violations.