Billionaire real estate magnate Stephen Ross overvalued a gift of land to the University of Michigan by over $25M, a tax judge found in federal court.
In 2002, Ross and a group of partners used a company formed by his accountant to purchase a lot of land in Southern California containing an AT&T data center for $2.95M. A year later, Ross arranged for that company, RERI, to donate the land to his alma mater, and Ross deducted the value of the gift as $33M in tax filings from that year, the Detroit Free Press reports. Two years later, the university sold the property for $1.94M.
U.S. Tax Judge James Halpern found that the property's value was actually $3.4M, and levied the maximum civil penalty against an individual citizen. Ross' accountant and lawyer at the time have both been found guilty of fraud in separate cases, and Ross claimed to have "severed all dealings" with the two.
Halpern ruled that the deductible value of RERI's donation will be reduced to $0, and that the company will also have to pay a penalty for overvaluing the property — 40% of the overvaluation.
Ross, the founder and chairman of Hudson Yards developer Related Cos., has otherwise donated over $200M to the University of Michigan, making him the largest donor in the school's history. He also is the majority owner of the Miami Dolphins NFL team.
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