Maximo Garza, 46, of Vancouver, Wash., pled guilty today in U.S. District Court to aiding the preparation of a false tax return. Garza is the pastor for Victory Outreach Church of Portland, a non-denominational church which has operated in Portland for over 15 years. Sentencing is set for January 11, 2010 at 10:00. Garza faces a maximum penalty of three years in prison and a fine of $100,000.
The Victory Outreach Church recently relocated its congregation to a new site in Southeast Portland.
During the plea hearing before Judge Garr M. King, Garza admitted that he provided
false expense invoices, which purported to reflect public relations and other services provided by Victory Outreach Church to William Thompson, who was then operating a mail order divorce service business using the name Hallwood, Inc. Thompson was able to use the false invoices to take expense deductions on tax returns filed by Hallwood, Inc. in order to fraudulently reduce his tax liability. Thompson pled guilty to tax evasion and was sentenced to a prison term in 2007.
In order to create a paper trail for the false transactions, Thompson would give checks to
Garza purporting to be for payment for the public relations and other services reflected on the invoices. Garza would then deposit the checks into special accounts set up for this purpose.
Garza would retain 5-10% of the gross amount of the checks as a fee and return the balance to Thompson, usually in cash, but occasionally by money order.
Between 2001 and 2003, Garza provided invoices reflecting a total of $735,441 in false
business expenses which Thompson claimed on Hallwood, Inc. corporate tax returns. The false documents enabled Thompson, operating as Hallwood, Inc., to evade an estimated $220,345 in federal taxes. Garza also assisted Thompson in disguising the purchase of a Jaguar automobile using Thompson's funds which had been deposited to one of the special Victory Outreach Church accounts.
Investigation indicates that neither Victory Outreach Church nor its Board of Directors
were aware of the false invoice arrangement between Garza and Thompson until after the fact.
Garza arranged for the special church account statements to be mailed to his residence rather than to the church business office where other church account statements were sent.
Garza also concealed the existence of the special accounts and the invoice activity from
an accountant who was hired to complete an annual review of church financial activity and records. When questioned by an investigator from the State of Oregon, Charitable Activities Section, about Hallwood checks, Garza denied knowing Thompson and falsely claimed that the church had actually performed services for Hallwood, Inc.
The case was investigated by the Criminal Investigation Division of the Internal Revenue
Service. The case is being prosecuted by Assistant U.S. Attorney Lance Caldwell.