LAS VEGAS (CN) – A strip club magnate claims his donation to the Erotic Heritage Museum of films and paraphernalia worth more than $10 million brought him an IRS audit because the appraiser he hired was not qualified.
Harry V. Mohney, who founded the strip club/adult bookstore chain Déjà vu Consulting, claims the appraiser, defendant Laura Henkel, failed to reveal that she worked for Exodus Trust, the foundation that runs the museum and also oversees the Advanced Study of Human Sexuality in San Francisco.
In his complaint in Clark County Court, Mohney says he discussed with Ted McIlvenna, the museum’s eventual curator, donating “some, part or all of his rare erotica collection to the Exodus Trust” to be used for research.
Mohney says he and McIlvenna agreed to establish the interactive Erotic Heritage Museum to display “expressive materials that would be donated to the Exodus Trust by Mohney.”
But to get a tax deduction for his charitable donation, Mohney needed a qualified appraiser. He claims Henkel told him and his accountant that she was “fully qualified to conduct these appraisals.”
Mohney claims Henkel told him, falsely, that she was accredited by the American Society of Appraisers in 2004, and had been certified by the Appraisal Standards Board of the Appraisal Foundation.
He says she also failed to tell him that she was an employee of the Exodus Trust, though she was its employee “before, during and after the appraisals that she conducted.”
Mohney made the donations, and Henkel drafted an IRS form estimating the value of the “non-cash donation” as $5.9 million, the complaint states.
She performed a second appraisal of Mohney’s “mint condition” loops, trailers, short and feature films that she appraised at $5.8 million. She prepared the IRS form with the estimated value of the non-cash donation as $5.7 million, Mohney says.
He says the IRS began an investigation and audit in September 2008 – one month after the museum opened.
During the audit, “which occurred over a number of years,” Mohney says, Henkel was asked repeatedly to provide her credentials and other back-up materials regarding her appraisal, but she refused.
Mohney says he paid her to “recreate” her work, to justify her valuations, but she “could not even replicate the method that she claimed to have used to value a single expressive item of donation.”
The IRS found discrepancies between the property as described in the appraisal and what was listed on the tax forms, and that the “$5.7 million in 2005 and $4.2 million in 2006 are neither reasonable nor substantiated,” according to the complaint.
Mohney seeks damages for fraud and misrepresentation, breach of contract and malpractice, disgorgement of all the money he paid Henkel work, and “the charitable deductions to which he was denied but to which he was otherwise entitled had it not been for the improper conduct and incompetence of Laura Henkel.”
He is represented by Neil Beller.
Attached to the complaint are 32 pages describing Mohney’s collection of erotica.