3 Plead Guilty in Tax Shelter Case

SAN DIEGO —  Three San Diego firms that sold allegedly abusive solar energy tax shelters to 400 local investors pleaded guilty Wednesday to charges that they conspired to cheat the federal government of taxes.

Investors in the tax shelters improperly claimed as much as $18 million in tax credits and deductions between 1978 and 1981, federal prosecutors alleged in a criminal information filed concurrently with the guilty pleas.

The three firms--Diversified Solar Systems Inc., National Solar Rentals Inc. and Associated Teachers Tax Center Inc.--pleaded guilty to conspiracy to defraud the government, which carries a maximum $10,000 fine. The firms are apparently now inactive, prosecutors said.

The owners of the firms--Darrell Wade Hurst, Richard W. Dodelin and Robert D. Fuger--each pleaded guilty to failure to maintain income tax records, a misdemeanor.

They will be sentenced in May by U.S. District Judge Earl B. Gilliam. Each faces a term of up to one year in prison and a $10,000 fine.

In addition, an injunction against the firms and the owners prohibits them from engaging in abusive tax shelters in the future.

IRS criminal investigators spent three years on the case, according to Assistant U.S. Atty. William E. Grauer, who issued the federal information.

More Than 9,000 Solar Panels

The typical investor, the government complaint alleged, bought a solar energy tax package for $27,500, paying $6,000 down and signing a promissory note for $21,500. The note plus interest payments totaled $30,100.

The investor, prosecutors said, then was told he could claim a total investment of $36,100 and was thus entitled to tax credits and deductions exceeding his $6,000 cash investment.

Collectively, the investors paid about $3 million in cash and signed about $15 million in notes for more than 9,000 solar panels. The investors will have to pay back the taxes they saved, prosecutors said.

Only a handful of those panels were completed or installed, according to the government’s complaint. Many of the solar panels now are sitting idle and unprotected in an empty field in Lakeside in east San Diego County.

Hurst and Dodelin were each paid $40,000 per year, according to their attorney, Jim Hewitt. He added that there were no tax shelter sales after 1979 “because they had problems getting people to accept them.”

Fuger was the owner of Associated Teachers Tax Center, which prepared the shelters’ tax claims and deductions, Grauer said.

In 1978, Hurst was placed on three years’ probation after his conviction for conspiring to violate provisions of the state insurance code.

Hurst was also president of Turbowind Inc., a San Diego firm that made and installed wind turbines and sold them as tax shelters to individuals and partnerships. Turbowind filed for protection under the U.S. Bankruptcy Code last April.