Until early this year, Larry Ranucci appeared to be leading a blessed life. In 1978, Ranucci quit his job as a vending machine salesman to become a bishop in the Life Sciences Church (LSC) and devote full time to missionary work, recruiting other ministers to his faith. Ranucci also took a "vow of poverty" that he informed the IRS in a letter made him "exempt from federal taxes."

As a bishop in the LSC, Ranucci often held services for would-be ministers that dealt primarily with how they could avoid taxes as clergy in the Life Sciences Church, and he would boast that, although he was personally a pauper, his church was rich. And indeed it was. Ranucci's church acquired considerable property, including a Florida condominium, several luxury Excalibur automobiles, a 31-foot racing boat and a Harley-Davidson motorcycle that he told the dealer was intended "to spread the word of God." Similar visions inspired roughly 5,000 other people in the New York area to become ministers in the LSC between 1979 and 1982.

But after awhile, the IRS saw the light as well and realized that Ranucci's church also had earned $1,696,045.33 between 1979 and 1981 but had paid no taxes. Earlier this year, Ranucci was convicted of income tax evasion and conspiracy, fined $10,000 and sentenced to seven years in jail. Last month he and several other leaders of the LSC filed an appeal in New York, which is now pending.

The LSC tax protester church is just the latest in a string of similar cases that have been investigated and prosecuted in the last few years. In New York, several members of the Freedom Church of Revelation, which has an estimated 3,000 members, were convicted this summer of conspiracy. Its leader, Frank Conti, pled guilty before the trial to income tax evasion. Late in 1984 in Virginia, several leaders of another church, Liberty Ministries International, also were convicted of income tax evasion. And Jerome Daley, the leader of the Basic Bible Church of America, was convicted in Texas in 1983 of income tax fraud.

Because of the recent series of convictions, an assistant U.S. attorney in the southern district of New York said that "the back has been broken on these things." But he added that tax protester cases have an "ebb and flow . . . there are a lot of people who still participate in these churches."

These cases and others now under investigation have their origins in what is loosely called the tax protester movement. Some prosecutors trace this movement back to William Drexler, who founded the Life Sciences Church in California in 1967. Drexler was convicted of tax evasion in California in late 1981 and is now in prison in California serving a five-year sentence.

According to court testimony, Ranucci's involvement with the LSC started in 1978, when he was approached by Drexler with an offer to become "bishop" of the New York and New England area for a fee of $60,000 that Drexler assured him would be just a fraction of the riches he could obtain by selling ministries for the church.

Ranucci leapt at the idea and, with a few associates, launched a series of well-orchestrated and high-pressure tax seminars presented as religious services at which Ranucci would regale audiences with tales of how they could earn $1.8 million in just one year, by paying the LSC membership fee of $2,900 and recruiting other ministers. In the New York area, a large percentage of the recruits were public employes from the police, fire and sanitation departments, according to court records.

Essentially, evidence presented at the trial indicates that LSC functioned as a pyramid operation in which all ministers earned their livelihoods through the "missionary program," or the selling of new ministries. Those ministers who succeeded in "spreading the light" would get commissions, dubbed "donations," for their churches that increased as they rose in the pyramid structure with higher sales.

LSC was run as an aggressive sales system, stressing the need for its ministers to have a positive mental attitude (PMA), which it illustrated in special seminars with a videotape of "The 13 Great Closes" by sales motivation consultant Douglas Edwards. And Drexler, called the "king of the tax fighters," could be heard beseeching his followers via videotape: "What we've gotta do in this country is to eliminate taxation . . . you can do it by setting up your own tax-free church."

Once signed up, new ministers would receive certificates saying that they had been "ordained" and documents that granted them honorary "doctor of divinity" degrees from the nonexistent Life Sciences College. They also received a "charter" for their church, a blank "vow of poverty form" and, most importantly, detailed instructions on how they should fill out tax forms to reduce or eliminate their taxes.

Typically, the new church would consist of a minister and several other people who often were close friends or relatives. All bank accounts would be placed in the name of the church and assets would be transferred to the church, but in practice, the church account was used regularly for daily living expenses plus lavish new purchases.

Frank Petrozza, who was on trial with Ranucci, and his wife had filed bankruptcy petitions in November 1978. But after joining the LSC church, taking a vow of poverty and paying no income taxes, the Petrozzas went on a spending spree, according to testimony during the trial. In the months that followed, they purchased for their church a $150,267 waterfront home in Lido Beach,N.Y., a $69,995, 32-foot fiberglass cabin cruiser and a $21,130 new Cadillac, according to prosecutors. Ranucci and other LSC leaders also engaged in large-scale secretive cash transactions that prosecutors argued were designed to "circumvent the requirement" that banks file currency transactions reports with the IRS for every cash transaction over $10,000. In early 1981, Ranucci opened an LSC account with a deposit of $760,000 in Barclay's Bank on Grand Cayman Island, where strict bank secrecy laws allowed him to hide funds from the U.S. government.

The Freedom Church of Revelation established by Frank Conti in 1979 bears many similarities to the LSC, at least in part because Conti used to be a member of the LSC and had worked with other church protest groups as well. Like LSC, the FCR was set up as a pyramid operation, with ministers earning commissions for their sales of ministries to new members.

FCR paid somewhat more attention to creating the appearance of being a church, according to trial testimony, but it also had other quite worldly ventures, including a church investment program consisting of a Mexican gold mine, oil wells, a nutritional center and several precious-metals accounts designed to provide ministers with "the means to retire for life."

Although the FCR raised hundreds of thousands of dollars for investment in its gold mine and oil wells, there were no returns on them for the investors. One Florida man named Jack Annan invested $400,000 in the gold mine operation, according to a prosecutor of the case against Conti. The man tried to recover the funds in a civil suit against Conti. Annan lost in his attempt to recover those funds, when the judge ruled that Annan should have known the venture was highly speculative.