Hard rock ministry tied to tax evasion scheme

You Can Run But You Cannot Hide International, Inc. (YCR), the Annandale-based hard rock ministry run by Bradlee Dean and Jake McMillian, set up trusts with help from a ministry in Oregon which has been a target of the IRS investigations for setting up tax avoidance schemes all over the country, Karl Bremer at Ripple in Stillwater reports. Dean and YCR dismantled the work done by Glen Stoll and the Embassy of Heaven for their ministry and even took their case against Stoll to district court in 2008, but the arrangement raises questions about whether Dean and his ministry were trying to avoid paying their rightful share of taxes.

Documents filed in Minnesota’s 10th District Court outline the arrangement set up by YCR with the help of Stoll. Bradlee Dean, whose real name is Bradley Dean Smith, and Jake McMillian, whose real name is Jake MacAuley, took classes from Stoll and paid him $6,500 to set up “established, exclusive, perpetual, irrevocable and assignable ministerial trusts” that would allow them to operate as a “‘free church’ that would be invulnerable to state regulation and control.”

As part of the deal, Smith was given an identification card from Stoll’s Embassy of Heaven that affirmed that, “On file is a signed statement by Bradley Smith renouncing allegiance to the world and declaring citizenship in the Kingdom of Heaven.”

Stoll also told his clients not to pay income taxes or employment taxes and to not file tax returns. And the ministry seemed to take that advice. According to the group’s 990 forms, it stopped reporting its activities to the IRS in 2003, the same year Smith signed his citizenship card with the Embassy of Heaven. It would resume filing its tax returns in 2008.

Smith created a series of organizations, including Old Paths Church which appears to have been modeled after a Texas church by the same name (and completely unknown to that church), to create the tax-free trusts with Stoll.

By 2005, Stoll and his clients were under investigation for tax fraud by the Department of Justice. As Bremer notes, Stoll has already been fined $50,000, is in violation of an injunction, and his arrest has been sought.

“People who buy into tax-fraud schemes are buying nothing but trouble — past due tax bills with interest and penalties and the possibility of criminal prosecution,” said Eileen J. O’Connor, Assistant Attorney General for the Tax Division. “The Justice Department and the Internal Revenue Service are committed to stopping the promotion of tax fraud.”

By 2008, Smith and MacAuley began to unravel the complicated tax-free trust that was being administered by Stoll. As Bremer reports:

According to court documents, Smith’s and MacAulay’s attorney advised them to sever all ties with Stoll, demand his resignation from their trusts and return all property from the trusts. Stoll refused, and on December 9, 2008, a summons and petition was attempted to be served on Stoll’s address, where a person there “refused to accept the documents” and “slammed the door.”

In affidavits filed with the court, Smith and MacAulay’s attorney stated that “The trusts that (Stoll) creates for their customers are shams, devoid of economic substance.” Stoll’s “false and fraudulent schemes” induced at least 30 customers to participate in their “illegal schemes” through at least 89 corporations sole and 47 ministerial trusts.

On March 27, 2009, District Court Judge Stephen Halsey granted Old Paths Church, Inc. and YCR, Inc. their motion for a summary judgment against Stoll that terminated Stoll’s trusts, removed Stoll as trustee, transferred assets from the trusts back to the two original entities, and awarded attorneys fees plus the $6,500 they paid Stoll to create the sham ministerial trusts.

The Minnesota Independent examined some of Smith’s financial dealings in 2009 when new IRS 990 forms showed that he and his band mates were taking a ministerial housing allowance despite his organization being a religious non-profit as opposed to a church. Those housing allowances are meant only for “duly ordained” members of the clergy. Smith has refused to answer questions related to his ordination or which church his organization belongs to.

In 2008, Smith and his sidekick MacAuley, greatly increased their compensation and housing allowance. According to the group’s most recent 990 filing, Smith was paid $51,303 salary and $45,887 for the housing allowance, raking in $97,190. MacAuley’s compensation was a bit less coming in at $66,897 in 2008.

Dean has not responded to repeated request for information about his ministry or a weekend request for comment on his association with Stoll.

Dean and his ministry have close ties to the Republican Party and GOP officials and candidates including gubernatorial candidate Tom Emmer, Gov. Tim Pawlenty, former Secretary of State and current state Rep. Mary Kiffmeyer, and state Rep. Dan Severson. Rep. Michele Bachmann has fundraised for the group extensively in recent years as well.