Tortuga Trace Holdings LLC Lawsuit: EcoVest Investor Claims
The White Law Group is investigating potential claims on behalf of investors in Tortuga Trace Holdings, LLC, a syndicated conservation easement sponsored by EcoVest Capital, Inc. Tortuga Trace raised just over $16 million from 125 investors in the fall of 2018, months before the U.S. Department of Justice sued EcoVest. Investors who bought Tortuga Trace through a financial advisor may be able to seek recovery through FINRA arbitration.
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What Is Tortuga Trace Holdings, LLC?
Tortuga Trace Holdings, LLC is a Delaware limited liability, with EcoVest Capital of Atlanta as its managing entity. Investors bought equity in a company that owned land. The plan was for the company to grant a conservation easement on that land and pass the charitable deduction through to its members.
These deals only work if the easement appraisal holds up. The IRS has argued for years that many of those appraisals were badly inflated.
Tortuga Trace Holdings Offering Terms
EcoVest filed an amended Form D with the SEC on October 1, 2018. It reports:
- Offering type: Rule 506(b) private placement of equity interests
- Date of first sale: September 18, 2018
- Total amount sold: $16,094,534 (the full offering)
- Number of investors: 125
- Minimum investment: $17,143
- Sales commissions: $1,835,416, or about 11.4% of the money raised
Commissions above 11% are steep by any measure. They are also a reason firms are expected to look hard at a product before letting their advisors sell it.
Tortuga Trace and the Case Against EcoVest
When Tortuga Trace went on sale, the IRS had already named syndicated conservation easements “listed transactions” in Notice 2017-10, issued in December 2016. That label meant participants had to report the deals to the IRS, which put investors on the agency’s radar. About three months after Tortuga Trace’s first sale, in December 2018, the Department of Justice sued EcoVest and several of its principals, alleging they promoted abusive tax shelters based on inflated appraisals.
EcoVest resolved the DOJ case in March 2023 without admitting liability. Under the settlement, EcoVest and its executives were permanently barred from promoting conservation easements and agreed to pay about $6 million, according to Law360. The IRS has since rolled out a 2026 settlement initiative for participants (IR-2026-65) and a dedicated Office of Conservation Easements (IR-2026-95). Tortuga Trace investors who took the deduction could face disallowance, back taxes, interest and penalties.
Firms That Sold Tortuga Trace Holdings
FINRA rules require brokerage firms to do reasonable due diligence on a private placement before recommending it. For a deal whose main selling point was a deduction the IRS had already flagged, that review should have focused on the tax risk. Advisors also needed a reasonable basis to believe the investment was suitable for each customer.
The Tortuga Trace Form D lists these firms in connection with sales compensation:
- Arkadios Capital
- Cabin Securities, Inc.
- Centaurus Financial, Inc.
- Coastal Equities, Inc.
- DFPG Investments, Inc.
- G.A. Repple & Company
- International Assets Advisory, LLC
- Kalos Capital, Inc.
- Lion Street Financial, LLC
- The Strategic Financial Alliance, Inc.
- Triloma Securities, LLC
A firm’s name on a Form D doesn’t mean it broke any rules. It does mean the firm helped sell the offering, so investors can fairly ask how well it vetted the deal and supervised its advisors.
Risks Tortuga Trace Investors Faced
Like other private placements, Tortuga Trace interests are illiquid. There is no exchange to sell them on, and investors get limited information about the property. The tax risk is larger still. If the IRS throws out the appraisal, investors can lose the deduction entirely and owe penalties and interest.
Advisors recommending Tortuga Trace in 2018 should have explained that the IRS was already treating these deals as potential tax shelters.
Recovering Losses From Tortuga Trace Holdings
Investors who purchased Tortuga Trace through a brokerage firm may have a FINRA arbitration claim against that firm. Common grounds include unsuitable recommendations, failure to explain the tax risks and inadequate due diligence. The White Law Group represents investors in these claims nationwide.
Talk to The White Law Group
If you invested in Tortuga Trace Holdings, LLC or another EcoVest conservation easement, call The White Law Group at (888) 637-5510 or send us a message for a free consultation. The White Law Group is a national securities fraud law firm with offices in Chicago and Seattle. Learn how a FINRA arbitration attorney can help you pursue your claim.
Frequently Asked Questions
How do I pursue a claim over my Tortuga Trace Holdings investment?
Most investors file a FINRA arbitration claim against the brokerage firm rather than suing in court. Most brokerage account agreements typically include a pre-dispute arbitration clause, and many investors don’t know it’s there. An arbitration panel can still award money damages.
What were the main risks of Tortuga Trace Holdings?
The biggest risk was that the IRS would reject the easement deduction, which it had already flagged as a listed transaction. That could leave investors owing back taxes, interest and penalties. The interests are also difficult or impossible to sell.
Can a brokerage firm be liable for my Tortuga Trace losses?
Yes, a firm may be liable if it failed to properly vet Tortuga Trace or failed to supervise the advisors who sold it. FINRA rules require firms to investigate private placements and confirm that each recommendation suits the customer.
