Tax Lawyer Sued for $17 M Over Claimed Dual Role
An unsuccessful horse-breeding investment by wealthy clients has put a Portland, Ore., tax attorney in the hot seat. He and his law firm reportedly are being sued for at least $17 million by two former clients over his alleged dual role in receiving a commission for promoting the venture while at the same time offering legal advice about its validity as a tax shelter.
However, a lawyer for Joseph Hanna, 68, says his client did nothing wrong and denies the plaintiffs’ claims that Hanna received commissions from the owners of the ClassicStar breeding operation for selling them on the venture, reports the Portland Oregonian.
Steve Ungar says the claims made against Hanna are “typical of those filed by parties who have independently made imprudent business decisions, yet down the road, attempt to shift the blame to professionals who have served them in good faith,” the newspaper reports.
The plaintiffs contend that Hanna received $618,000 in commissions from ClassicStar and affiliates for steering investors to the now-collapsed Kentucky-based thoroughbred horse-breeding operation. It reportedly filed for Chapter 11 bankruptcy on Friday, owing some $100 million to 300 creditors. They also say he provided lengthy opinion letters endorsing the investment as a tax shelter.
But Ungar insists it is “absolutely untrue” that Hanna OK’d multimillion-dollar tax deductions concerning the ClassicStar investment. Instead, he says, Hanna advised the plaintiffs to get a private letter ruling from the Internal Revenue Service—advice they ignored, the Oregonian reports. Both sides say Hanna disclosed to his clients that he also provided legal representation to ClassicStar, but the plaintiffs say he never told them about the commissions he allegedly received.
