Tom J. Billman and his associates made a lot of money at EPIC over the years, and like many people who make a lot of money, they were not enthusiastic about giving up a large share of it in their tax returns.
So they did for themselves what they had been doing for doctors, lawyers and other well-to-do people around the country: They set up a family of real estate investment tax shelters.
These "in-house" partnerships, as they were known, acquired millions of dollars' worth of houses -- one former EPIC official put the figure at more than $100 million.
They rented out the houses and generated tax benefits in much the same way as the ones they set up for the public.
Like the public ones, these grew rapidly. And like the public ones, they are in default on their mortgages.
But unlike the public ones, the insider partnerships are not in bankruptcy, and, according to former EPIC employes, current officials "are doing handstands" to prevent them from collapsing.
The partnerships' creditors are also doing handstands, trying to figure out whose assets are whose, who is entitled to what rent money and where the rent money has been going. "Several thousands of properties and the rents thereon are 'missing' and unaccounted for," attorneys for creditors complained to the U.S. District Court in Alexandria in September.
By not filing for bankruptcy and by substituting a new general partner, EPIC has managed to keep the in-house partnerships out of both bankruptcy court and state conservatorship.
Keeping the partnerships afloat enables the EPIC insiders involved to escape a number of adverse tax consequences.
Liquidation of real estate holdings can allow the IRS to treat certain sums as income -- and tax them -- even if the owners actually get no money. In addition, the IRS is sometimes entitled to recapture deductions taken in the past.