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A less taxing form of 'worship'

'Ministry' gave advice to cheat on income taxes, the IRS says.

By JUSTIN GEORGE
Published October 22, 2006


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MOUNT DORA - In this tourist town known as Central Florida's Quaint Village Getaway, the upcoming craft fair is a major event. The city offers baton twirling classes and shows The Sound of Music in the park.

There are 19 gift or home decor stores that line downtown's Donnelly Street. The block smells like potpourri.

On this street, two hours northeast of Tampa, one business didn't quite fit in.

Up some wood stairs, above the Secret Garden Victorian costume shop, was the Guiding Light of God Ministries.

The manager downstairs remembers asking them to keep it down because they stomped too loudly. But otherwise, merchants didn't know much about the group. Some thought it was a cult.

The raid came in February 2004. Black suits carried out computers and files. Police cars lined the streets.

"That was the most excitement we had in town," said Bill Martin, owner of Whispering Winds gift shop. "Nothing ever happens in Mount Dora."

Guiding Light of God Ministries wasn't a cult. Federal prosecutors say it was a tax-protest group, which bilked the IRS of millions and taught customers how to cheat on their taxes. It was the group they say helped actor Wesley Snipes try to defraud the government of more than $11-million.

Prosecutors in Tampa announced the indictments of Snipes, the group's leader, Eddie Kahn, and another group member this week. They all face charges of conspiracy to defraud the IRS and presenting a false claim for payment to the IRS. Snipes also faces six counts of failing to file income taxes.

The IRS has charged or convicted 22 people in Central and North Florida over the last year and a half, and tax-protest groups, which vary in extremism, have a long history in the United States.

During the Vietnam War, protesters objected to giving the government money. Some tax protesters have become more violent, killing government officials or attacking IRS offices.

But most such protesters stay in the shadows. They advertise through Web sites, fliers and word of mouth using attractive themes: We are underdogs against Uncle Sam. The government takes too much of your hard-earned money.

"Do you FEAR the IRS? If you fear a Public Servant, then he is not your SERVANT," one of Kahn's fliers says. "He is your MASTER!"

Well-versed leader

Behind all the rhetoric is a common goal, IRS special agent Michael Yasofsky said. Some people are truly duped into thinking obscure tax loopholes exist, Yasofsky said, but most clients just want to hide money.

That's what Kahn helped people do, Yasofsky said.

He is described as a tall, thin, serious man with curly hair and a charismatic style. He signed paperwork "Eddie Ray: Kahn" or "House of Kahn." He is well versed in the Bible, Constitution and even Black's Law Dictionary, all of which he has quoted in official correspondence. He is a religious man who never eats without praying, says Milton Hargraves Baxley, an attorney for Guiding Light of God Ministries.

Baxley was convicted in August of two counts of violating a civil order prohibiting him from promoting, selling or advising people on federal tax matters.

On the same day the feds raided the ministries office in Mount Dora, 14 miles to the east, Kahn, and his wife, Kathleen "Kookie" Kahn, quickly packed up their belongings and left their tan home on 5 rural acres.

"They were gone almost overnight," neighbor Dana Warner said. They left behind a computer, dumped in their pond.

Kahn founded American Rights Litigators in 1996, arming it with certified public accountants and lawyers dedicated to protecting the rights of Americans, he claimed.

"American Rights Litigators is a business that was there to help people with tax problems," said David Stephen Lokietz, who worked for the group between 2001 and 2004. (He pleaded guilty in September to conspiring to commit fraud via the issuance of false securities or financial instruments.)

Shift to Mount Dora

Prosecutors said it was anything but that, and in 2003 it morphed into Guiding Light of God Ministries and moved to Mount Dora.

In April 2003, Kahn filed a "Vow of Poverty," with the Lake County clerk.

He called himself the Overseer of the Guiding Light of God Ministries and bequeathed them all his earthly possessions.

"Prosperity may be considered a noble goal, for those who strive for it," Kahn wrote, "however, the poverty I ... chose will better groom my soul to accept God's direction as a blueprint for how I ... must live to be able to serve Him better."

It was nothing more than another fraud, prosecutors said. Kahn called Guiding Light a "corporation sole," a tax-exempt religious group. By transferring assets to corporation soles, Kahn claimed income would be tax exempt and protected from creditors. For between $1,300 and $1,400, he could create one for you.

American Rights Litigators and Guiding Light of God Ministries charged members dues and claimed to have 4,000 customers. For $25 and up, they drew up "bills of exchange," fake checks to pay the IRS. They could send frivolous letters that stalled and harassed tax reviewers, prosecutors said.

They could threaten to file complaints against IRS employees. The group's lawyer and CPA could represent people on the phone in IRS collection hearings, and tie the IRS in knots.

Kahn's loopholes

They could draw up complicated tax schemes called the "Redemption Theory" or do what they did for Snipes: File forms using the "861 Argument." Based on a misinterpreted IRS code clause, it claims money earned domestically shouldn't be taxed.

Kahn traveled to smaller cities such as Newport News, Va., Southfield, Mich., and Mechanicsburg, Pa., putting on seminars.

He didn't just espouse his tax theories. He lived them, and federal records show him playing a cat-and-mouse game with the government over thousands of dollars in tax liens filed, revoked and filed again.

In 2004, a judge ordered Kahn, three others and Guiding Light to stop preparing, selling or marketing tax schemes. Kahn disappeared. Investigators think he's in Panama and the Panama News said he turned up at an expatriate Christmas party. He turned it into a strange prayer meeting, offending some.

Kahn believes the IRS doesn't have the legal authority to collect taxes because its operating regulations were never officially established, according to the Dallas Morning News, which reported on a 1995 seminar.

Baxley, the former Gainesville lawyer who served as Guiding Light's attorney, said he cannot speak for Kahn. But distaste for the IRS is a bond they share.

"If you know what due process and constitutional rights are, you don't have any when you deal with them," Baxley said. "Because you've got some revenue agent out there who says, 'I think he owes $100,000 and we're going to collect it from you,' and he says: 'Pay up.' "

The IRS files liens against people until everything is taken away, he continued.

"The IRS is not a court," he said, meaning there is no courtroom to plead a case fairly. "You point out what the law is and they ignore it."

- Times researcher John Martin contributed to this report. Justin George can be reached at (813) 226-3368 or jgeorge@sptimes.com.

[Last modified October 22, 2006, 08:15:18]


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