For years, Adam LaFavre cultivated an image as a successful real estate dealmaker and a man of faith.
And according to the story in today's Star Tribune, LaFavre also was successful in avoiding taxes:
The IRS said in its affidavit that LaFavre reported no taxable income in 2003 and 2004, yet he made a $1.2 million down payment on a 32,000-square-foot Wayzata home in October 2004 and was to make monthly payments of $50,000 under a contract for deed. LaFavre bought the home from auto dealer Denny Hecker, and paid off the financing in less than three years, Hecker said.
LaFavre didn't just buy a house four times larger than the house I critiqued yesterday as out-sized. He also spent money improving it. In 2005, I found he appeared before the Orono Planning Commission to request a variance for custom seven-foot-high security gates at the house, for safety reasons. Why would a mortgage broker feel less safe in the $7.5 million home than the highly visible car dealer who lived there?
Well, maybe if he were involved in investment fraud...
LaFavre talked openly about trips he made to countries such as El Salvador and Russia as part of a mission to spread the Gospel to foreign countries, Wiers recalled. "He felt that God blessed him to be financially successful," Wiers said.
And thus we have our text for the day, my brethren: The matrix of faith, investment, tax avoidance and the prosperity gospel.
Ponzi investment schemes work on this basis. They are sold by people who exhibit great prosperity and apparent piety. They are purchased by people who believe in miracles — that is, in investments that return exceptionally high rates of interest at little risk. People of faith who trust other Christians can make perfect suckers.
One way to produce high returns out of nothing, of course, is by robbing new investors to pay a little trust-me money that keeps the earlier investors quiet.
Another way is to avoid taxes. You can do it illegally, but that may catch up with you, and suddenly you're sitting on the wrong side of the seven-foot gates. Or you can start a church and do it legally. Just don't try it with one of those blessed-are-the-poor operations.
Yesterday I noted that Weddings of Wayzata (WOW) has opened for business in a church operated by Mac Hammond's Living Word Christian Center (LWCC) in the heart of LaFavre country. There's no mention of Living Word on the WOW website and vice versa. However, the company is registered as a domestic corporation — not a non-profit — with the same address as LWCC headquarters in Brooklyn Park.
The company's business appears to be renting the church for weddings at $1,500 a pop — or $1,000 in the off-season. OK, I thought. Renting the facility to those I assume to be non-parishioners is a creative way to pay off the mortgage.
Let's see how big that mortgage might be. The property sold for $973,000 last October, but not to LWCC. The owner is listed as JSM Inc., a non-profit entity registered a month before the sale, located at the Deephaven home of Jeffrey S. McCall. The property is valued at $0 for property tax purposes.
[Note to non-locals: All the locations in this post are located in the prosperous vicinity of Lake Minnetonka. McCall was an executive vice president of Zamba Corp., a CRM software consulting firm which had the momentary distinction of being a stock picked by a Chicago psychic in 2000. It was losing money when it was acquired by another firm in December 2004.]
Hammond's church has a history of smart financial dealing, including real estate transactions that involve private parties. His headquarters complex was picked up from a Resolution Trust Corp. sale the last time a Bush administration bailed out over-exuberant lenders, and now the property and nearby land is worth considerably more.
Is McCall helping the church or the church helping McCall? It's a mystery.
When God wants you to be rich, he doesn't necessarily furnish the details. Or that the crafty laborers in the vineyards will be the only ones driving the Bentleys.
