Religious society's tax convictions are overturned

An appeals court sent the 12 counts against two members back for trial.

The Philadelphia Inquirer/November 1, 2007

A federal appeals court has overturned more than a dozen tax evasion convictions against members of a small South Jersey religious society known for its staunch opposition to war and the taxes that fund the military.

When the three members of the Restored Israel of Yahweh were convicted in 2005, experts considered them the only tax protesters in recent history to face prison time for their religious beliefs.

Kevin McKee and Joseph Donato were given 24 to 27 months in prison, and Donato's wife, Inge, was sentenced to six months in prison.

The three-judge panel of the U.S. Court of Appeals for the Third Circuit overturned 12 convictions against McKee and Joseph Donato, and sent those counts back for a new trial. The court also vacated two charges against Inge Donato, ruling that she be acquitted.

In its ruling, filed on Monday, the panel upheld one conspiracy charge against all three.

The court overturned the convictions based on technical, legal matters - staying away from the philosophical aspects of the defendants' beliefs.

"This case should have never been tried in the first place. Fraud was the furthest thing from their minds," said Peter Goldberger, who represented the Donatos. "They did their best to comply with their religious beliefs and violated the tax laws as a result. . . . Lots of people violate the tax laws and don't get convicted."

Goldberger represents other pacifist religious organizations, such as Quaker groups, which refuse to pay taxes on moral grounds. He said those religious organizations usually face civil penalty, not prison time.

He said the appeals court "set a terrible precedent" by not addressing the larger religious issues of the case.

"It's a threat to every established pacifist religion that has had kind of an unwritten understanding with the IRS," he said.

McKee and Donato were partners in a small construction company, and Inge Donato worked there as a part-time secretary and bookkeeper.

They were accused of not paying about $300,000 in taxes for themselves and their employees who also were members of their society. They paid taxes for employees who were not members.

Prosecutors pointed out that they also did not pay state taxes, or pay into Medicare, Social Security or workers' compensation, all of which have nothing to do with the federal treasury that funds the military.

The members admitted that they could have been more "pure" with their protest, but they said the tax issue was hardly the central preoccupation of their beliefs.

They were indicted after a former member of the society came forward and offered information on them.

Among the 35 members of the Vineland-based society, the feeling that they were made an example at a time of war runs deep.

"Historically, people like [McKee] . . . who acted like he did, for the reasons he did, don't get prosecuted criminally," said Rocco Cipparone, McKee's attorney. "It looks and feels unfair."

While Cipparone said the members appeared sincere in their beliefs, arguing religious grounds for not paying taxes is not a legal defense.

It was unclear yesterday if the government would re-try McKee and Joseph Donato.

Inge Donato has finished her sentence, and McKee and Joseph Donato have moved from their prison camps to halfway houses and home confinement, their lawyers said.

McKee said yesterday that the group wasn't ready to comment on the court's ruling.

"Our lives are still upside down right now," he said.

One of the main issues in the case also remains unresolved. All three defendants were ordered to file delinquent tax forms and pay back taxes, as a condition of their release from prison.

If they do not, they could potentially be sent back to prison. Their lawyers had asked the appeals court to remove that as a requirement of their release, but the court did not address it.

"It's still a confrontation waiting to happen," Cipparone said.

In an interview at a Pennsylvania prison camp last year, McKee said he wouldn't pay the taxes, even if that meant his return to prison.

The defendants did pay a series of fines and penalties that accompanied their convictions. But, with those convictions overturned, they are due a refund.

By Cipparone's calculations, the government now owes his client $4,800.

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