Federal judge halts ‘timeshare donation scheme’ pitched in Kansas City

A federal judge in Montana has ordered a halt to promotions of a “timeshare donation scheme” that promised tax deductions for donors, including some in the Kansas City area.

An injunction names Project Philanthropy Inc., which does business as Donate for a Cause, and Timeshare Closings Inc., which does business as Resort Closings Inc. It bars them from promoting what the U.S. Department of Justice said was an “abusive timeshare donation scheme.”

The companies and their founder, attorney James Tarpey, agreed to the injunction, the Justice Department said.

According to a federal complaint, the scheme relied on an appraisal that “grossly overvalues the donated timeshare rights” that a customer would use to claim a big charitable tax deduction. Timeshare owners were encouraged to donate the timeshare rights to Donate for a Cause, the Justice Department said.

The federal lawsuit named three others who it said helped Tarpey in the scheme. One has consented to a ban from preparing timeshare appraisals and advising on charitable contribution donations on federal tax returns.

Promoters of the scheme pitched it to various television news programs, the government said, including one Kansas City station that did a report on the program as a way to get out of an unwanted timeshare deal. The report on Fox 4 talked with a Kansas City area resident who worked with Donate for a Cause to donate a timeshare.

Donate for a Cause included the Fox 4 report on its website that promoted the program.

Timeshares allow buyers the right to use a vacation home or other property along with others by scheduling their use ahead of time.

The Internal Revenue Service has issued an alert about scams that inflate charitable deduction claims.

This story was originally published September 29, 2016 at 3:33 PM with the headline "Federal judge halts ‘timeshare donation scheme’ pitched in Kansas City."