Tax relief more likely than refunds for investors
Investors who lost money with Valley Investments in Grand Junction might get back more in tax relief than they get eventually from what remains of the company, Valley’s receiver said Thursday.
And for that, Valley investors can thank the king of Ponzi scammers, Bernie Madoff. Still, that could be thin consolation for those who ponied up investments in $20,000 and $30,000 increments with Valley Investments and its owner, Philip Rand Lochmiller.
Valley Investments and Lochmiller remain under investigation by the FBI and state securities regulators.
Valley appeared to have been operated as a Ponzi scheme that took in more than $30 million, Kirk Rider of the Grand Junction law firm of Rider & Quesenberry, has said in court papers.
If a court draws the same conclusion, either by a finding in the court that ordered Valley Investments shut down this summer, or in a criminal proceeding, then investors can file returns deducting their losses as thefts as opposed to investment losses.
That’s an advantage because they can file for the deductions more quickly than if they had to wait to learn the full fate of their Valley investments, said Kathy M. White, vice president of the Grand Junction accounting firm of Chadwick, Steinkirchner, Davis & Co.
Those rules were approved by Congress to benefit people bilked of $52 billion by Bernie Madoff, who now is serving a life term in federal prison. How much tax benefit the investors receive will depend on several factors, including their tax brackets.
“Many will get more back from the IRS than they’ll get from the receivership,” Rider told investors Thursday in a conference call.
One investor who identified himself only as Richard said Valley Investments’ collapse hit him so hard he was unable to hire an attorney to oversee his claim.
In all, 120 investors listened in on the call in which Rider said it could take as many as two weeks before a Denver district judge issues a ruling on his request to freeze the assets of individuals associated with the company.
The receivership has hired a forensic accountant to determine when Valley Investments became a Ponzi scheme, if indeed it wasn’t always operated as one, Rider said.
Lochmiller’s attorney, Cliff Stricklin of Denver, has maintained Valley Investments’ financial problems stemmed from the economic downturn of the last year.
The exact value of Valley Investments’ assets is difficult to estimate, Rider said on the conference call.
Citing Valley’s manufactured-housing development in Dinosaur, Rider said the property could be worth $200,000 to $300,000 if the court invalidates all liens and other encumbrances on the property.
Rider will ask the court to treat all investors on the same basis, no matter whether they believe they have secured claims.
“Many investors thought they had secured investments, and our investigation is showing they were not,” Rider said.
Investors have been supplied with claim forms that must be returned to the receivership by Oct. 30.
“We’re not going to be hypertechnical as we evaluate these claims. We just need to understand them,” he said.
Some investors had told Rider they feared prosecution because they are asked to sign the forms under penalty of perjury.
“If you fill out the forms in good faith,” he said, “you don’t have to worry about perjury assertions.”