2 Indicted in Scheme to Avoid Taxes

SAN JOSE —  Two Santa Clara County men were indicted by a federal grand jury Tuesday on charges of taking part in an alleged scheme to use a church as a front to avoid paying millions of dollars in income taxes.

Winston Mesch of Sunnyvale and James Hoffman of San Jose were each charged with three counts of filing false income tax returns while acting as ministers of the Church of Universal Harmony in San Jose between 1982 and 1984. They were also charged with three counts each of using the church’s tax-exempt status to help others cheat on federal income taxes.

U.S. Atty. Bill Price said Mesch and Hoffman formed local congregations of the church, which had operations statewide and was chartered by the Universal Life Church of Modesto. They allegedly held seminars teaching people how to set up their own congregations, enabling them to deduct up to 50% of their personal income.

The two men advertised the seminars in local newspapers and charged up to $1,500 in “donations” per person, Price said.

More than 3,000 taxpayers paid to attend the seminars and the Internal Revenue Service estimates the government is owed more than $50 million in back taxes and penalties from all those involved, Price said.

The Universal Life Church was not implicated in the indictments.