Olive Farm Holdings Lawsuit | EcoVest Conservation Easement
The White Law Group is investigating potential claims involving Olive Farm Holdings, LLC, an EcoVest Capital private placement that raised more than $17.2 million from 119 investors beginning in December 2020. Here is what the offering’s SEC filing shows, and what investors’ options may be.
Olive Farm Holdings was marketed to investors as a syndicated conservation easement, a type of tax-driven land deal the IRS has targeted for years. Investors who were sold this offering can speak with our FINRA arbitration attorneys about a possible claim against the brokerage firm that recommended it.
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What Is Olive Farm Holdings, LLC?
Olive Farm Holdings, LLC is a Delaware limited liability company formed in 2018 and based in Atlanta, Georgia. Its Form D names EcoVest Capital, Inc. as the managing entity. EcoVest sponsored dozens of conservation easement offerings that were sold through independent brokerage firms.
EcoVest Capital and the Justice Department Lawsuit
In December 2018, the U.S. Department of Justice sued EcoVest Capital in federal court in Atlanta. The government alleged that EcoVest promoted an abusive conservation easement tax scheme built on inflated land appraisals. Olive Farm Holdings reported its first sale on December 24, 2020, while that lawsuit was still pending. In March 2023, the court entered a permanent injunction barring EcoVest from promoting conservation easement deals. EcoVest consented to the injunction without admitting the allegations. Read more in our EcoVest Capital investor alert.
Olive Farm Holdings Offering Terms
According to the Form D amendment signed January 6, 2021:
- Exemption claimed: Rule 506(b) of Regulation D
- Type of security: Equity
- Total offering amount: $17,253,602, reported as fully sold
- Number of investors: 119
- Minimum investment: $18,214
- Date of first sale: December 24, 2020
- Sales commissions: $1,548,390, about 9% of the money raised
The Form D lists the following brokerage firms as receiving sales compensation:
- International Assets Advisory, LLC
- The Strategic Financial Alliance, Inc.
- IBN Financial Services Inc.
- G. A. Repple & Company
What Brokers Owed Olive Farm Investors
By late 2020, brokers recommending investments to retail customers had to follow Regulation Best Interest. That rule requires a broker to understand a product’s risks and costs and to put the customer’s interest first. A brokerage firm must also research a private placement before approving it for sale. A pending federal lawsuit against the sponsor is the kind of fact that research should uncover.
Risks of Conservation Easement Private Placements
- IRS challenges. The IRS has treated syndicated conservation easements as a listed transaction since 2016, which flags them for scrutiny. Investors may lose the deduction they were promised.
- Back taxes, interest and penalties. If a deduction is disallowed, investors can owe the tax they saved plus interest. A gross overvaluation can add a 40% penalty.
- High fees. Sales commissions alone took about 9% of investors’ money in this offering.
- No way out. These interests have no public market, so investors generally cannot sell them.
- No SEC review. The SEC does not review or approve Form D offerings.
Recovering Losses in Olive Farm Holdings
Investors may be able to recover losses from the brokerage firm that sold them Olive Farm Holdings. Those losses can include the original investment and any IRS taxes, interest and penalties that followed. These claims are generally filed through FINRA arbitration.
Contact The White Law Group
The White Law Group, national securities fraud attorneys with offices in Chicago and Seattle, is investigating potential claims on behalf of Olive Farm Holdings investors. Call (888) 637-5510 for a free consultation, or contact us online.
Frequently Asked Questions
How do I file a claim to recover money invested in Olive Farm Holdings?
You file a claim against the brokerage firm that sold you the investment, usually through FINRA arbitration. Most brokerage account agreements typically include a pre-dispute arbitration clause, and many investors don’t realize they agreed to one. Arbitration can still result in a monetary recovery, which may include tax penalties and interest as well as the money you invested.
What is a syndicated conservation easement?
A syndicated conservation easement is a private placement in which investors buy into a company that owns land, and the company then gives up development rights on that land in exchange for a charitable tax deduction. The deduction is passed through to investors and is often several times larger than what they invested. The IRS has challenged many of these deals, arguing the land was overvalued to inflate the deduction.
Can the brokerage firm be held responsible for my losses?
Yes. Brokerage firms must supervise their brokers and research the private placements they approve for sale. A firm that sold an EcoVest offering without looking into the sponsor’s legal problems may be liable for failing to supervise.
