No. 54: Daniel Carpenter and a Host of Criminal AllegationsDaniel E. Carpenter (Simsbury, CT), attorney and businessman, was scheduled to report to a federal prison on Friday, June 20. His saga involves cases over more than a decade in federal district courts, circuit courts of appeal, and the Supreme Court. Among the federal agencies involved in the cases are the Department of Justice, the Department of Labor, the Department of the Treasury, and the Internal Revenue Service (IRS). Several cases are ongoing despite Carpenter's incarceration.
The Section 1031 Fraud Allegations
Carpenter owned and operated Benistar, Ltd. and its subsidiaries. One Benistar function was to act as an intermediary in Section 1031 property exchanges. That section of the Internal Revenue Code allows the owner of investment property to defer capital gains taxes on the sale of the property by rolling the proceeds of the sale into the purchase of replacement property. However, the tax deferral is lost if the owner (the "exchangor") takes possession of the sale proceeds. Therefore, companies such as Benistar offer to act as an intermediary by holding the proceeds in escrow until the exchangor is ready to close on the replacement property.
A federal judge in Boston sentenced a Simsbury man on Wednesday to three years in prison for a fraud involving
Daniel E. Carpenter, 59, had offered services to clients in Massachusetts called "exchangors," which prosecutors describe as "clients who engaged in tax-deferred real estate exchange transactions" -- further explanation of that is below.
Carpenter's business held money for these clients in escrow accounts but made risky investments with it while emphasizing how safe the accounts were in communications with the clients. Since the clients' rate of return was capped, he would have walked away with high profits. Instead, he lost more than $9 million of his clients' money.
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Lawsuits against Benistar
Stephen Ouwinga, et al v. Benistar 419
In, et al
Filed: November 29, 2010 as 10-2531
November 29, 2010 22:23:57
Defendants: BENISTAR 419 PLAN
Defendant - Appellees: EDWARDS
ANGELL PALMER &
DODGE, LLP, JOHN H. REID, III, JOHN
LIFE INSURANCE COMPANY, JOHN
VARIABLE LIFE INSURANCE
COMPANY, KRIS LESLEY
Plaintiff - Appellants: CHRISTINE
OUWINGA, LEANN OUWINGA,
and STONEY CREEK FISHERIES AND
INC., on behalf of themselves and all
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Real Estate Transfer Turned Fraud Becomes 3 Years in Prison for Connecticut Man
Posted on behalf of the firm on 23 March 2014.
When it comes to the transfer of real estate, there are quite a few very specific laws and regulations, and as one Connecticut man recently found out, the punishments for violating those laws can be severe.
According to sources, Daniel E. Carpenter, 59 year old resident of Simsbury, Connecticut, was recently sentenced to 3 years in prison, and then 3 years of supervised release, as well as a $100,000 fine. The sentence, passed down by U.S. District Court Judge George A. O’Toole, punctuated the end of Carpenter’s 6 year ordeal, in which he was convicted of 19 separate counts of mail and wire fraud.
The convictions reportedly came about after authorities figured out that Carpenter had been involved in illegally handling money for clients, and using their money for illegal purposes while the clients believed they were in tax-deferred real estate exchanges from the months of August through December 2000.
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