2 Real Estate Developers Guilty in Tax Fraud Case

Two Albany real estate developers have been convicted of tax evasion for inflating the value of property they donated to a controversial Setauket church by more than 12 times the price for which it was later sold.

The developers, brothers Michael and Paul Gordon, each face up to 20 years in prison and $ 370,000 in fines, in addition to payment of back taxes totaling more than $ 100,000.

The two were convicted Tuesday in U.S. District Court in Albany of a single count of conspiring to defraud the government and three counts each of tax evasion over a three-year period, stemming from a 1980 land donation they made to St. German of Alaska Church in Setauket.

Assistant U.S. Attorney George A. Yanthis described the case as unusual. ”There haven’t been very many criminal cases involving over-evaluation of deductions. There have been several nationwide as far as I know, but not too many.”

The church’s pastor, the Very Rev. Paul W.V. Ischie, has been under investigation by the Internal Revenue Service since last year, for allegedly allowing people who donate land to the church to take charitable deductions at inflated rates. Neither Ischie, nor his attorney, could be reached for comment yesterday, but IRS spokesman Bob Cobel said the investigation was continuing.

Yanthis said the Gordon brothers donated a parcel of land and a vacant building outside Utica to St. German’s in 1980. They had the land appraised at $ 622,500 by William Blackmore, an appraiser recommended by Ischie, and deducted portions of that amount from their taxes over the next three years. The deductions were made during a period of time since the IRS places a cap on charitable deductions in any given year, Yanthis said.

Three months after the Gordons donated the property to the church, the church sold it for $ 50,000, he said. Michael Gordon could not be reached for comment yesterday, and Paul Gordon declined comment.