Infamous operator of popular Catholic website facing charges of tax evasion

BAKERSFIELD, Calif. (KBAK/KBFX) — A man who years ago was the subject of an Eyewitness News investigation after allegations surfaced that he defrauded a host of Catholic charities is now facing federal tax evasion charges.

Years ago, Michael Galloway owned the popular "Catholic Online" website, as well as many of other Catholic-themed internet domains. His tax evasion case is before a jury this week at the federal courthouse in Fresno.

At issue is tens of thousands of dollars Galloway reportedly owed the IRS from 2003 to 2006. The government hopes to prove he underpaid taxes and later misled the IRS in an attempt to get out of paying what he owed.

Catholic Online billed itself as "The Global Leader in Catholic On-line Donations and Payments," a supposed Catholic version of PayPal that accepted charitable giving and then distributed payments to the appropriate organizations. It was the subject of a lawsuit by the Kern County District Attorney's Office, which alleged years of deceptive or fraudulent business practices.

Galloway agreed to pay restitution of $210,000 to several charities.

In a separate legal proceeding, the state labor board made him pay three former employees tens of thousands of dollars in disputed earnings.

PREVIOUS COVERAGE ON GALLOWAY:

• Bakersfield man accused of scamming in God's name
• Investigation follow-up: Former Galloway employee awarded back pay
• Bakersfield owner of Catholic Online accused of tax evasion
• Alleged 'in God's name' scammer agrees to settlement (see below)

Below is the text from a 2009 story from Eyewitness News' Kurt Rivera that no longer displays on BakersfieldNow due to technical issues.

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Michael Galloway was accused of scamming nonprofit Catholic groups "in God's name" across the country and in Canada.

Now, a surprising twist has come to an exclusive Eyewitness News investigation with ties to the Bakersfield man and his controversial online business.

The Internet businessman faced Day 1 of his civil trial in an alleged case of international business fraud. But, in a surprise move, Galloway ended the potential courtroom suspense before the trial could even begin by agreeing to a settlement.

After nearly two years since the case was first filed, Galloway has never agreed to an interview, and he refused again on this day.

"The allegations have to do with contentions that the defendant has made false representations and engaged in unfair business practices," said Deputy District Attorney John Mitchell.

Galloway, plus four Web sites he owns, is accused of bilking nonprofit groups by holding their money hostage in a PayPal-like cyberspace while using the Catholic name. The so-called "global leader in Catholic online donations and payments" faced $140,000 in restitution to nonprofits across the country, plus punitive damages, which could have pushed his final bill much higher.

The settlement includes paying restitution of $5,000 per month for 18 months to settle up with the nonprofits, plus $110,000 to Mark Lombard. He's a former Galloway employee who alleged Galloway skipped out on paying him.

"I'm just relieved that it's over. This is not what we're about. We're about helping couples and families in trouble and this, we never wanted to do this. All we ever wanted were donations that were given to us," said John Corgiat, a treasurer with Retrovaille of Northern California, a nonprofit group known for helping repair troubled marriages.

"I think Mr. Galloway realized that he really doesn't have a leg to stand on. In this case, it's really satisfying to see that there is some closure here," said Michael Hudson of the Santa Cruz-Monterey Retrovaille chapter, commenting on the case in the hallway just outside the courtroom.

"One of the nice things about this resolution is that, three things. No. 1, all the victims are going to end up getting restitution. No. 2, the citizens of this county didn't end up paying for the investigation. In other words, it's all being reimbursed and we've avoided a two-week trial which would have kept us from working on other cases," said Deputy District Attorney John Mitchell, just minutes after the civil case settlement was put on the record in Kern County Superior Court.

So what did Galloway have to say about the settlement? Nothing.

He raced down the stairs, running from Eyewitness News, again. Eyewitness News asked his attorney for comment, but he declined.

To ensure Galloway makes good on his restitution, he has put up the potentially lucrative domain Web site name he owns:"Catholic.org" as collateral. The Web site could be worth millions.

He has also dropped a lawsuit he filed against a group of disabled nuns that also sued him.