Investor filed only one state tax return in past 25 years
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Brian R. Burke has said under oath that he's a very wealthy man, worth $15 to $20 million. The controversial Newton investor, developer, and contractor has bought and sold millions of dollars worth of real estate over the years, frequently facing lawsuits from sellers who say he deceived them to increase his profits.
Even when times seemed tough — Burke filed for bankruptcy in 2010 — he swore that he was earning $10,000 a month.
Yet, Burke rarely does something that's required of every Massachusetts resident earning as little as $8,000 a year: file his taxes. State records show that he has filed state income tax returns only once in the past 25 years, and only three times before that.
Massachusetts Department of Revenue records, available on computer only since 1988, showed that Burke filed tax returns in 1988, 1989, 1990, and 2009 during that period.
Tax officials declined to discuss Burke's situation, but some critics of Burke — who is now locked in a legal battle with a formerly homeless man who contends that Burke never paid him for his house — say Burke's apparent failure to file state tax returns reveals his character.
"It appears that he defrauded not only vulnerable people, but the government as well," said Peter Fenn, attorney for the family of a deceased Brookline man that sued Burke to recover $4.5 million worth of property Burke claimed the man had given him for $100. "He's hiding income and not reporting it. It's a tangled web to unweave."
Burke, 60, seemed perplexed when asked why he hasn't filed state taxes since 2009 and not once before that since 1990.
"I don't know what you're talking about," he said in a brief phone interview. "My lawyer told me not to talk to you any more. You've caused a lot of damage. You don't know what you're talking about. You're telling half stories."
Burke's attorney, Kevin Kerr, did not return several phone calls seeking comment.
Burke describes himself as a "contrarian" real estate investor who specializes in buying distressed properties, sometimes from people who can't afford to maintain them, and selling them at a profit. He attributes several of the lawsuits over his acquisitions to sellers' remorse when they see Burke's success at reselling the property. For example, he bought a house — in the name of Turkey Hill Trust — on Chestnut Hill Avenue in Brighton for $550,000 in 2012 and sold it seven months later for $746,000.
In all, Burke estimates that he has bought and sold 25 to 50 properties over the last 10 years, according to his 2014 deposition in a lawsuit.
But Burke puts many of the properties he acquires in the names of trusts, or the names of some of his 12 children, effectively giving away the income the properties generate.
Tax experts say that if properties are handed off "legitimately" to others, then the income they produce would not be taxable to the donor. But assets cannot be given away to avoid creditors, including taxing agencies, they said.
One case illustrates the situation.
The brownstones Burke said he was given for $100 by the late Morris Stern of Brookline technically belonged to the Burke Family Trust, with two of his children, Alexander and Kathleen, as the beneficiaries. As a result, when Stern's estate paid $300,000 to settle their lawsuit and get the properties back, the money went to the trust rather than Burke personally.
But in court documents in that case, another Burke offspring, Brian Jr., made it clear in the Stern case that his father identifies and purchases the properties and then decides who will be recorded on legal papers as the owner.
"He's the guy who calls the shots, right?' asked attorney David Kelston, who represented the Stern estate as it tried to get the two Brookline properties back. "On the big matters — what to acquire, what to do with it, what legal papers to execute — he's the decision maker, correct?"
"Absolutely, yes," Brian Jr. said.
The elder Burke also owns a development company and a construction company that works on commercial and residential projects, according to court records and lawsuits filed against him, and he also acts as a conventional real estate broker.
But while he was building a profitable family business, Burke generally was not filing state income taxes.
The Internal Revenue Service does not disclose similar information about federal taxpayers. However, property records show that that the federal government placed a lien on one of his buildings in 1991, the only evidence that either state or federal governments have ever pursued him aggressively.
A state Department of Revenue spokeswoman said she was not permitted by law to discuss Burke's tax history. She would not say how someone who appears to have significant earnings could fail to file taxes for so long without consequences. Under state law, any person who earns $8,000 or more annually must file a tax return.
Internal Revenue Service officials wouldn't comment, referring only to agency publications explaining the tax collection process.
But a former federal prosecutor, who prosecuted tax fraud and white-collar crime cases for 14 years, said it is not surprising that an individual with multiple companies and trusts could escape detection if he paid minimal or no personal income taxes.
"Depending on the complexity of the business structures that an individual uses, it can be a daunting task for the IRS to get the money to stick to the individual and make a provable tax evasion case," said Charles Tamuleviz, now a lawyer at Nixon Peabody in Providence and Boston.
But if the "tax loss numbers are large enough" and prosecutors find a pattern of willful tax evasion over a number of years, the Justice Department could pursue a criminal case. In extreme cases, tax evaders can face a federal prison term.
More immediately, Burke faces a potential financial setback of a different kind. A judge is considering whether a formerly homeless man should be given a chance to regain the Brighton house that Burke is accused of taking without paying a promised $400,000 in the late 1990s.
Burke argues that he owes John Henry Wenk nothing due to the outcome of a related lawsuit, but Wenk's lawyer said Burke's failure to pay left his client homeless.
"Wenk lost the only asset he had in the world to Burke, and he has been impoverished since," said Kelston, now representing Wenk. "The mortgage Burke promised him would have allowed him to live in modest comfort for the rest of his life. He deserves at least that."