Monday, February 18, 2013

Façade Easement Appraiser Barred From Preparing Appraisal Reports and Ordered to Turn Over List of Clients

DOJ On February 12, 2013, the United States District Court for the Northern District of Ohio issued an Agreed Order of Permanent Injunction that, inter alia,

  • bars MAI-designated real estate appraiser Michael Ehrmann and the company he owns with his wife, Jefferson & Lee Appraisals Inc. (JLA), from preparing any kind of appraisal report or otherwise participating in the appraisal process for any property relating to federal taxes;
  • bars Ehrmann and JLA form providing expert testimony or expert support in any case in which they did not prepare the appraisal report valuing the donated conservation easement, except Ehrmann and JLA my continue their ongoing engagements for expert services in the cases in which they are already retained;
  • orders Ehrmann and JLA to provide a copy of the injunction to the Appraisal Institute’s Senior Manager for Ethics and Standards, the licensing office in any state in which they are licensed to appraise real estate, and all former and current clients who retained them since January 1, 2007, to appraise property for any federal tax purpose; and
  • orders Ehrmann and JLA to provide to counsel for the United States a list of clients for whom they prepared appraisal reports for tax purposes on or since November 1, 2009 (including each client’s address, phone number, e-mail address, and federal tax identification number).

In its complaint (discussed here), the Government alleged that Ehrmann repeatedly and continually made material and substantive errors and omissions, distorted data, and provided misinformation and unsupported personal opinions in his appraisals to significantly inflate the value of façade easements for federal deduction purposes. Ehrmann (who is 70 years old and has now retired) and JLA consented to the injunction without admitting the allegations against them. The injunction mandates that Ehrmann and JLA provide the list of their clients noted above to counsel for the United States within 45 days of February 12, 2013.

The Department of Justice issued a News Release regarding the injunction on February 13, 2012.


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