Prosecutors win $5.2M settlement in construction tax-scam case

Five uncharged partners backed a firm that inflated tax credits by inflating project costs

Mar.March 11, 2017 02:25 PM

The Orchid Grove apartment complex in Homestead, one of four with inflated project costs, according to prosecutors.

Federal prosecutors won a $5.2 million settlement after accusing a South Florida construction company of stealing federal money by inflating the cost of housing projects for low-income residents.

Five partners behind the now-closed construction company, called DAXC, avoided federal charges but agreed to pay the seven-figure settlement to the federal government to resolve the case through a deferred prosecution agreement, the  Miami Herald reported.

Louis Wolfson III, Mitchell Friedman, David Deutch, Michael Wohl, and Felix Braverman were partners in DAXC, a construction company headed by Braverman and affiliated with Miami-based Pinnacle Housing Group.

Pinnacle formed DAXC in 2009 and went on to qualify for tax credits from the Florida Housing Finance Corporation for four apartment complexes for low-income tenants, three in South Florida and one in Central Florida: Cypress Grove in Winter Haven, Vista Mar in Miami, Orchid Grove in Homestead, and Avery Glen in Sunrise.

“Recently, the federal government contacted Pinnacle about DAXC, and indicated that profits generated by DAXC on these four developments were unwarranted,” Pinnacle said in a company statement. “Upon learning of this, DAXC voluntarily returned the profits along with a fine, thus concluding the inquiry.”

In a deal with prosecutors, the five uncharged partners behind Pinnacle’s DAXC affiliate agreed to pay a $1 million fine to the government and to repay $3.4 million of inflated federal tax credits plus $800,000 in fees for development and construction of the four low-income apartment projects. [Miami Herald] — Mike Seemuth

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