Setauket Pastor Guilty in Tax Case

The pastor of a controversial Setauket church pleaded guilty yesterday to federal charges that he conspired to inflate the value of properties donated to the church so the donors could take unwarranted tax deductions, the U.S. attorney’s office said yesterday.

The Rev. William V. Ischie, pastor of St. German of Alaska Eastern Orthodox Church, pleaded guilty in U.S. District Court in White Plains to a felony charge of conspiracy and two felony charges of aiding and assisting others to file false and fraudulent tax returns. The government has been investigating Ischie and his church for more than three years.

Assistant U.S. Attorney Lisa Smith said Ischie conspired to provide donors of property to the church and St. John of Rila Eastern Orthodox Monastery with fraudulent charitable income-tax deductions through grossly inflated real estate appraisals from 1980 through at least 1985. Ischie lives at 140 Main St., Setauket, which is also the address of the church and the monastery.

The conspiracy resulted in the filing of about 105 fraudulent tax returns regarding 22 different properties that generated more than $ 4.4 million in tax deductions for the donors, Smith said. The government has not determined how much of the $ 4.4 million was fraudulent, she added.

The scheme, officials said, involved Ischie placing ads for donations of property in publications nationwide. The donor was then referred to an appraiser – William Blackmore – who provided the donor with an appraisal at a value much greater than the fair-market value of the donated property. Subsequently the church or monastery sold most of the property for a fraction of the value provided by the appraiser.

The two tax counts related to the donation of two Long Island properties to the church in which the government alleges that fraudulent and overstated tax deductions were taken.

In one of the tax counts, a vacant Kings Point parcel on Wildwood Road was donated to the monastery after a 1981 appraisal that set the value of the parcel at $ 160,500. The property was eventually taken by the county for non-payment of taxes.

In the other tax count, a commercial property at 64 Division St., Levittown, was appraised at $ 905,250 in December, 1980, and donated to the church, two-thirds in that month and one-third in January, 1981. The same appraiser provided an appraisal to the church in June, 1981, asserting that the fair-market value of the property was $ 98,500 and the property was sold on July 6, 1981, for $ 104,964.80.

Neither of the two taxpayers who took deductions for the donation of the two properties have been charged. The investigation is continuing.

Ischie has signed a cooperation agreement with prosecutors and will testify on behalf of the government if called upon, Smith said.

Ischie faces up to 5 years in prison and $ 250,000 in fines for the conspiracy chage and 3 years in prison and $ 250,000 in fines for both tax counts when he his sentenced on Feb. 2.