(CBS) Former Bears quarterback Kyle Orton may be done with the Bears, but his business with Chicago isn’t quite finished.
Orton is suing a Chicago law firm for allegedly giving faulty advice on an investment that was supposed to yield large tax credits but instead cost him and other investors millions of dollars.
In 2005, the law firm of Chuhak and Tecson led Orton, of Denver; co-plaintiff Edward Rappaport of Atlanta, and other investors to put large sums of money into oil and gas interests designed to provide tax credits under Section 29 of the federal tax code, according to suit filed Thursday in Cook County Circuit Court.
To receive tax credits under Section 29, investments must be made into an entity that sells biomass gas produced from landfills.
Five individuals, also clients of Chuhak, were primarily responsible for the creation of “tax shelters” — business entities formed for the conversion and sale of landfill gas to energy that yield tax credits under Section 29, the complaint said.
Chuhak, in addition to advising Orton and other investors, helped draft documents to create 10 tax shelter entities for investors that included Green Gas Delaware Business Trust; Green Gas Delaware Statutory Trust; Bradshaw Gas General Partnership; and Ciao Gas general Partnership, according to the complaint.
Chuhak encouraged investors to put undisclosed amounts of money into these entities — without notifying Orton and the others about specific statutory requirements that had to be met for tax credits to be available, the complaint says.
Failing to meet statutory requirements, investors allegedly missed out on the tax breaks, according to the complaint. And it wasn’t until 2010 that Orton and other investors realized what had occurred.
The four-count complaint, which seeks class-action status, claims “Chuhak allowed Plaintiffs to invest in worthless entities under false pretenses,” and seeks more than $200,000 in damages for each count — breach of fiduciary duty, aiding breach of fiduciary duty, fraud and aiding fraud.
Representatives from Chuhak were unavailable for comment Thursday evening.
The Sun-Time Media Wire contributed to this report.