Originally published on Forbes.com.
Things did not go well for Christopher Dufresne, son of famous psychic Sylvia Browne and himself a psychic, in the Tax Court decision that came out last week. Judge Kerrigan confirmed the IRS notices of deficiencies of over $500,000 and accuracy penalties that tack on another hundred thousand plus. You would have thought that he would have seen it coming, but that is not how it works according to his book.
Some Background
Sylvia Browne died in 2013 and was succeeded by Mr. Dufresne as the owner of Sylvia Brown, Inc. and CEO of Society of Novus Spiritus, the church founded by Sylvia Browne, which describes itself as Gnostic Christian. Sylvia Brown, Inc. was dissolved in 2015 and Mr. Dufresne continues the business as Sylvia Brown Group, Inc.
I have been reading Mr. Dufresne’s book My Life With Sylvia Browne: A Son Reflects on Life with His Psychic Mother. A nutshell version of the Gnostic Christian theology of the church is that we are all engaged in spiritual growth. After you die you go to the “Other Side” where you reflect on lessons learned and decide whether you want to go back and live another life and consider which of the 45 themes you want to focus on and line up a spirit guide who stays on the other side. (You pick two themes, they are things like Actuator and Builder).
Psychics like Mr. Dufresne and the late Ms. Brown can clue you in on what the program is and also help you clear up stuff from the past lives. Psychics have limitations though. They cannot get real specific information about themselves.
So Charlie (Mr. Dufresne’s spirit guide) could not tell him to not waste his money going to Tax Court.
Here is Mr. Dufresne explaining things a bit, if you have five minutes to spare.
The Issue
It’s a pretty simple issue – unreported cash receipts of $1,505,546 for the years 2010-2013, a period during which Mr. Dufresne’s income had sharply declined. Mr. Dufresne maintains that the receipts were repayments of loans that he had made to his mother.
The Analysis
Judge Kerrigan goes through an eight-factor drill to determine whether the payments were bona-fide loan repayments –
(1) the ability of the borrower to repay; (2) the existence or nonexistence of a debt instrument; (3) security, interest, a fixed repayment date, and a repayment schedule; (4) how the parties’ records and conduct reflect the transaction; (5) whether the borrower has made repayments; (6) whether the lender had demanded repayment; (7) the likelihood that the loans were disguised compensation for services; and (8) the testimony of the purported borrower and lend.
It did not go well. There were two odd things. One was that he testified that he had loaned money to his mother to buy properties, but it appeared that the properties were in his name. The other thing that struck me as really odd was the way in which the payments were made.
Petitioner provided a record, purportedly kept by a Corporation employee, of Ms. Browne’s payments to him. He testified that Ms. Browne wrote checks out to cash for a Corporation employee to then cash and deposit into petitioner’s bank accounts. This document consists of a list of dates, check numbers, check amounts, and amounts paid to petitioner. On this document the amount of the check often exceeds the amount purportedly paid to petitioner. He did not provide any of Ms. Browne’s canceled checks to support his testimony or any other evidence to support the document, such as testimony of the Corporation employee who purportedly made and kept the record of the loan repayments.If the Commissioner introduces some evidence that the taxpayer received unreported income, the burden shifts to the taxpayer, who must establish by a preponderance of the evidence that the deficiency was arbitrary or erroneous. (Emphasis added)
Here is a pro tip for reading Tax Court decisions, whenever the word “purport” in any of its forms appears, you know that things are not going to go well for the taxpayer.
Lessons
The limited investigation I have been able to do which does not include any sources that will go on the record inclines me to think that Mr. Dufresne is probably being honest. That doesn’t make Judge Kerrigan wrong. Being a judge and all she has to consider the evidence.
I should also mention that having a for-profit side by side with a church tends to have my bs detector going off, but again off the record sources that I find credible lead me to the tentative conclusion that there are not Kent Hovind style shenanigans going on here. It is worth noting that there was no fraud penalty or apparent CI involvement in the case, although given the limited resources of the IRS that does not mean a lot.
So here is how he stands when it comes to Reilly’s Laws of Tax Planning. It’s mainly about the Fourth Law – “Execution isn’t everything, but it’s a lot”. At some point, there should have been notes with repayment terms. That’s pretty basic. The thing about somebody cashing Sylvia’s checks to give him cash is just bizarre. What were they thinking? The Sixteenth Law – “Being right without substantiation can be as bad as being wrong”.
The Theology
The past lives, doing it over till you get it right, spirit guide stuff is pretty familiar to anyone who has spent some time hanging around in New Age circles. Calling it Christian is a little unusual, so I reached out to my theological brain trust.
A graduate theological student, who prefers to be off the record, wrote me.
It’s lovely spirituality, but a sect of Christianity? Nope. Not even close. That said, “ Christian Gnosticism” in a 21st C. context is so far from orthodoxy as to render it a meaningless term in Christianity. It’s like saying “Zucchini Pasta.” Sure, it might be pasta shaped, but it’s really zucchini.
In fact, it might not even be that close.
Anyway, it’s something that, by definition, can’t exist, so if they want to call whatever they’re doing “Gnostic Christianity,” sure, why not?
Robert Baty, a retired IRS appeals officer who has dedicated a lot of his retirement to church-state issues wrote me
Gnostic might apply to some extent, but not Christian.
The name L. Ron Hubbard came to my mind in reading about what that operation is all about.
Scam might be an appropriate label to use in describing how they have come up with a religion to support their psychic business.
I have to say that this is one of those times where Bob and I will have to agree to disagree. As far as I have been able to tell only Sylvia and Chris ever did readings. Waiting lists could be years. Even at relatively high rates that does not create the type of leverage that can get the big money flowing into a church. Publius Novus appears to be a pretty modest operation.
And from the Evangelical corner this from the Reverend William Thornton.
I’m not familiar with SNS specifically. Their claim to be “Gnostic Christian” may be “gnostic” under some meanings of the word but would certainly not be Christian, lacking the beliefs of orthodox Christianity. A good bit of the New Testament is written specifically to address certain strains of gnostic heresy of the first century. But any group can use the terms today and supply their own definitions. Similar groups are legion, I feel sure.
I heard from Tom Bigley who is on the board of SNS, who is a minister, a cardinal actually. I told him about a few of the responses and he indicated that they believe that Christ was a prophet who was providing people with the truth about the world, but that his message was hijacked and distorted.
Other Coverage
David Hansen has Who Knew? Psychic’s Son Owes Over 600K, Tax Court Rules behind the Law360 paywall.
Caroline Vargas has Psychic Faces Penalties for Not Reporting $1.5M in Cash Deposits on Bloomberg Tax.