SALT LAKE CITY — A tax expert testified Friday he visited the Delta site of a purported solar energy facility, walked into a home and flipped the switch on and off, believing solar lenses were generating the power.
"I did not think it was connected to the grid," said Richard Jameson, a specialist in federal tax law who filed tax returns to the IRS on behalf of RaPower3 clients.
That company, IAUS, Neldon Johnson and Gregory Shepard are the subject of a federal complaint lodged in 2015 by the U.S. Department of Justice that alleges the business enterprise is nothing more than an "abusive tax scheme" that has cost the U.S. Treasury at least $50 million.
The case is now before U.S. District Judge David Nuffer in a trial expected to last at least two weeks. Federal prosecutors want repayment for the lost revenue due to energy tax credits and depreciation revenue they say was wrongly claimed.
They also seek to stop any further promotion of the lenses, which continues through tours of the Delta site, the company's online promises of tax credits and weekly local radio shows in which Johnson promotes the technology.
The Department of Justice asserts the lenses have never generated any power and never will.
"Defendants' solar energy scheme is clearly a complete sham. Defendants knew it was not generating income for customers for more than 10 years. Yet despite their clear knowledge that the system did not produce energy or income for customers, they continue to sell lenses, encourage customers to take purportedly related tax deductions and credits and deplete the U.S. Treasury," justice attorneys wrote in court filing.
Jameson testified Friday that he believed the home he saw at the Delta site was off grid, observing a nearby solar tower that looked to be powering a turbine producing steam.
"It was making a hole in the ground that would fry things. It was pretty hot," he said.
A cable not far from the turbine continued toward the house, he testified.
Under questioning from Department of Justice attorney Erin Hines, Jameson conceded it was only after Johnson was deposed for trial that he learned that the house was not being powered by the lenses.
According to his testimony, Jameson handled tax returns for many of the RaPower3 customers, assuring the IRS through "placed in service" letters provided by RaPower3 that the lenses met federal rules for tax credits and depreciation.
He did not personally verify they were in service, he testified, and said he had no personal knowledge that the lenses produced heat.
Jameson testified he wrote letters on behalf of RaPower3 customers to the IRS that his clients were not in the business of energy production but rather were leasing/renting tangible personal property.
Jameson took over clients from other tax preparers for RaPower3 — in one case involving a preparer who refused business from RaPower3 clients because of its entanglement with the IRS.
In testimony Friday, he said he continues to represent RaPower3 customers and claim the renewable energy tax credits.
Under cross-examination by defense attorney Denver Snuffer Jr., Jameson said he believes the lenses qualify for tax benefits because they meet federal rules that they are in use or available to use or are being used for research and development, or in advertising.
He added he believed IRS employees or customers themselves got it wrong because they kept talking about "solar panels" such as those mounted on rooftops, and not solar process heat.
"The problem I had with the IRS employees is they did not fully understand the process," he said. "They don't produce electricity, they produce solar process heat."
The Department of Justice contends that while the solar lenses may be able to concentrate solar radiation sufficient to set wood smoldering, that alone is not sufficient to generate "solar process heat" — heat from the sun which accomplishes some useful function or application, according to court filings.