A Portland clergyman faces possible prison time for helping the owner of a mail-order divorce business evade $220,345 in taxes, a scheme that put an illegal tithe in the pastor's pockets.
Maximo Garza, the 46-year-old pastor of Victory Outreach Church of Portland, pleaded guilty today in U.S. District Court to aiding the preparation of a false tax return, a felony that carries a penalty of up to three years in prison. His sentencing is scheduled for Jan. 11.
Garza did not return a phone call to the church seeking comment about his plea. The church referred questions about Garza to the assistant pastor, who declined comment.
The government accused Garza of entering into a scheme about eight years ago with William C. Thompson, of Newberg, who then ran a mail-order divorce service called Hallwood, Inc.
Here, according to federal prosecutors, is how the scheme worked:
Between 2001 and 2003, Thompson gave checks totaling $735,441 to Garza for public relations and other services that were supposedly performed by the nonprofit Victory Outreach Church. In fact, the church performed no such work.
IRS investigators later found that neither the church nor its board of directors knew of the scheme.
Garza set up special "church" accounts and deposited Thompson's checks into them, taking a fee of 5 to 10 percent. He gave the rest back to Thompson in cash or money orders.
The pastor made sure the statements came directly to his Vancouver home, rather than the church, and he concealed the existence of the accounts from an accountant paid to perform a yearly review of the church's books.
Garza arranged to print up invoices for the phony services, which Thompson claimed as business expenses on his corporate tax returns. Garza also assisted Thompson in disgusing the purchase of a Jaguar automobile.
The government alleges that when an investigator for the Oregon attorney general's office's charitable activities section first questioned Garza about the checks from Hallwood Inc., he denied knowing Thompson and claimed the church had performed services for the company.
Thompson pleaded guilty to tax evasion in 2007 and was sentenced to one year and one day of prison.
On the day of Thompson's sentencing, Thompson's lawyer played a video announcement produced by his client in which he referred to tax evasion as the "stupidest crime in America."
The spot, which aired in Thompson's home town of Yakima, encourages tax evaders to knock it off and cooperate with the IRS.
