Televangelist William Todd Coontz is finally serving a five-year prison sentence for filing fraudulent tax returns and failing to pay his federal income taxes.
On April 3, 2019, WSOC-TV investigative producer Michael Stolp tweeted,”It appears Todd Coontz is officially a prison inmate, but maybe not for long. Per court documents he was scheduled to voluntarily surrender to the Bureau of Prisons yesterday. His attorneys filed a motion for release pending trial, which a 3 judge panel approved 2-1 yesterday.”
Coontz served one day and was then released. Coontz would appeal his tax conviction all the way to the United States Supreme Court, which denied the final appeal on February 22, 2021.
In response to the infamous Jim Bakker/PTL scandal, Congress held a hearing in 1987. Pastor D. James Kennedy testified, “I would think that if a person is going to give money to something, that they have … a responsibility to learn where it is going.”
But how can donors make responsible decisions if charities and churches are not transparent about their finances?
James MacDonald’s ministry Walk in the Word (WITW) reported to the Internal Revenue Service (IRS) that it received $0 in donations for a three-year period encompassing July 1, 2011, to June 30, 2014. A Trinity Foundation investigation has determined the ministry failed to report donations from non-profit charitable foundations.
In 2012, WITW received $16,000 from Mitchell Swaback Charities and $11,563 from the National Christian Charitable Foundation.
In 2013, WITW received $2,000 from the Everett D & Geneva V Sugarbaker Foundation, $600 from the Fish Family Foundation of Maine, $10,000 from Mitchell Swaback Charities, $13,590 from the National Christian Charitable Foundation, and $5,000 from the Overbeck Family Foundation.
In 2014, the National Christian Charitable Foundation gave WITW $257,638, but it is difficult to determine if the money was given throughout the year or after the fiscal year ended on June 30th.
The failure to report at least $58,000 to the IRS should serve as a red flag for supporters of James MacDonald. Where did the money go?
For the fiscal year beginning July 1, 2014, WITW switched from filing the Form 990-EZ to the Form 990-N, which does not disclose total revenue or total expenses.
Although the Form 990-N is restricted to organizations normally receiving $50,000 or less in revenue, WITW used the form while receiving more than $270,000 from foundations in 2015.
More recently, the National Christian Charitable Foundation donated $82,696 in 2017.
The Same Name Game
When two separate organizations operate with the same name or similar names, it creates an opportunity for multiple bank accounts with the same name and opportunities for financial abuses. Trinity Foundation calls this “the same name game.”
While MacDonald served as pastor, Harvest Bible Chapel registered the tradename Walk in the Word Ministries and transferred more than $2 million in assets from WITW to the church.
It is possible that all the charitable foundation donations were transferred from WITW to the church. However, the 990-EZ and 990-N documents do not show such transfers.
Furthermore, many of the charitable foundations giving donations to WITW identify the recipient not just by name, but also by Employer Identification Number (EIN) 36-4218233. Clearly, their goal was to support the media ministry of MacDonald rather than the church.
MinistryWatch recently reported, “An analysis of the financial statements by MinistryWatch, with the assistance of the Dallas-based Trinity Foundation, reveals what the Trinity Foundation calls a ‘suspicious’ pattern of self-dealing between Kanakuk and founder ‘Coach’ Joe White and his family.
Kanakuk Ministries is one of the largest Christian camps in the United States. Each summer, it serves more than 20,000 children from around the country. Its fiscal year 2017 revenue topped $35-million.”
Self-dealing occurs when non-profit executives operate a for-profit company which does business with the non-profit organization. This is not illegal unless the for-profit company excessively profits off the non-profit entity.
Self-dealing may represent a conflict of interest. Independent board members should carefully vet such transactions and only approve them if the costs are based on competitive, fair market prices, which Kanakuk Ministries claims to have done.
Kanakuk Ministries rented property from Kukorp LLC and K-Land One LLC of which both are owned by White family members. Kanakuk Ministries also provided a $310,000 loan to Kukorp.
The MinistryWatch investigation revealed, “If you add up all these numbers, Kanakuk Ministries paid the Whites, or entities wholly owned by the Whites, $572,132 in 2017.”
MinistryWatch has published two articles concerning sex crimes allegedly committed at Kanakuk Ministries.
MinistryWatch reported, “A civil complaint alleges that there were at least 57 victims, but the prosecutor in his case estimates that the real number could be in the ‘hundreds.'”
Kanakuk Ministries was not on our radar until Warren Cole Smith, president of MinistryWatch reached out with questions. In fact, that is how many of our investigations begin: A journalist, concerned donor, church member or employee calls or emails us with questions or tips.
If you have a question or inside information about a ministry or church, please share it with us. We are especially interested in tips about fraud (which involves deception – and we are not accusing Kanakuk Ministries of fraud), theft, abusive behavior or excess (such as extravagant spending on homes, vehicles, clothing and private jets).
Have you ever wondered where televangelists travel on privately owned and ministry owned jets? We take a critical look at televangelist flights in the first episode of our new 30 minute long video blog Air Traffic Out-of-Control.
For almost twenty years, Trinity Foundation has tracked televangelist aircraft and we’ve discovered TV preachers often travel after the Christmas holiday season ends. January 2nd was a busy day for televangelist and ministry aircraft.
Our first episode also features sermon clips in which televangelists Kenneth Copeland, Creflo Dollar and Jesse Duplantis talk about their use of jets. Duplantis claims that 99% of the time he travels alone. Is this good stewardship?
Our next episode of Air Traffic Out-of-Control will explore the operating costs of private aircraft. We are hoping to publish it in April.
Following the publication of this article, Trinity Foundation was informed that it included a factual error: An exemption existed in the tax code preventing ministers from being subject to the excise tax. After more research and visiting an IRS office, we have an update.
Before publication, we contacted an IRS spokesperson and were told the excise tax on excessive compensation applied to churches based on Section 3401. While asking follow-up questions, a misunderstanding emerged regarding the role of Section 3401.
Congress authored and adopted Section 3401 as part of the tax code. It defines terms such as wages and employer, while creating a list of exemptions from other tax rules and regulations for income earned from specific jobs. Definition number 9 exempts “services performed by a duly ordained, commissioned, or licensed minister of a church in the exercise of his ministry.”
A church will be subject to the excise tax only if it pays more than $1 million in wages to an employee that is NOT a minister and NOT an independent contractor. Trinity Foundation has investigated several churches that have paid attorneys more than $1 million. However, attorneys typically work as independent contractors and pay their own taxes directly rather than being paid as a payroll tax by the church.
The excise tax on parachute payments will not be applied to ministers either.
We are sorry for all confusion created by the original article. The updated version of the article features includes a strikethrough of two sentences and three additions in bold text.
The IRS has finalized its rules on an excise tax to discourage excessive compensation at non-profit organizations. In its February 16th Bulletin, the IRS announced an update to section 4960 of the Internal Tax Code taxing non-profit organizations and churches that pay “covered employees” who are not ministers more than $1 million in wages or provide excessive parachute payments.
The Bulletin explains that a covered employee “is one of the five highest-compensated employees of the organization…” These individuals are typically listed on a Form 990 filed with the IRS. Churches, synagogues and mosques are exempt from filing the financial disclosure document.
When covered employees (non-ministers), who are often executives, receive more than $1 million in wages or excessive parachute payments, the non-profit must file a Form 4720 Schedule N. Then the non-profit organization must pay a 21% tax on the excessive compensation.
In 2018, the IRS modified the Form 990, revealing if organizations have paid an excise tax on payments of more than $1 million. Excise payments are indicated on page 5, line 15 of the Form 990.
Hillsdale College and Glory of Zion International (Chuck Pierce) so far do not report paying the excise tax even though both feature an executive receiving more than $1 million in compensation. This is not proof of wrongdoing because some compensation is exempt from the excise tax such as an organization carrying liability insurance on an employee. Pierce also serves as a minister and his compensation is not subject to the excise tax.
This excise tax penalizes excessive wages, not fees. If a pastor is paid to perform a wedding, the income is considered a fee and would not subject to an excise tax.
Besides excessive wages, the IRS also treats parachute payments as a form of excessive compensation.
After Jerry Falwell Jr. resigned from Liberty University last year, journalists reported the disgraced university administrator could receive $10.5 million in parachute payments.
According to The Wall Street Journal, “Mr. Falwell is due his $1.25 million salary for two years, followed by a lump-sum payment of about $8 million, because of a clause in his contract that allowed him to resign with full pay if his responsibilities were curtailed.”
The Covid-19 pandemic has delayed the courts from hearing numerous court cases. A year ago, Trinity Foundation shared a list of eight court cases we are monitoring. Our list is growing as more lawsuits have been filed against religious organizations.
In May 2020, we reported that a panel of judges upheld televangelist Todd Coontz’s conviction of tax evasion. Then justice got delayed again. Coontz appealed his conviction to the United States Supreme Court which finally denied his appeal on February 22, 2021.
In 2018, Mail America Communications sued Benny Hinn, alleging the televangelist’s World Healing Center Church owed the publisher almost $3 million. Oral arguments are scheduled for April 7, 2021.
National Outreach Foundation Inc. (NOFI), one of the few non-profit organizations to have its tax-exempt status revoked by the IRS in 2020, has sued the federal government in US Tax Court.
NOFI is operated by a husband-and-wife team with no additional independent board members or employees. Therefore, no oversight is available for the organization.
In 2017, NOFI generated $62,185,730 in revenue and spent only $425,125 in grants to charitable organizations. Therefore, less than 1% of revenue was spent on charity. If NOFI were a private charity it would be required to pay out at least 5% annually of its total assets.
Two of the most dangerous trends in Christianity are the growing rejection of financial transparency and removal of leadership oversight in megachurches and ministries. Such actions create an environment where wolves in sheep’s clothing turn the Church into a marketplace and victimize an undiscerning flock.
To document these trends, Trinity Foundation established the Governance Project, a database providing information on how religious organizations are governed.
While looking at amended articles of incorporation for televangelist churches, Trinity Foundation investigators discovered that many televangelists were eliminating church member voting rights. Church legal documents frequently used the phrase “the corporation elects to have no members.”
By vesting all decision-making power in a board of directors which are often hand-picked friends or employees, pastors consolidate power in their organizations and eliminate church member oversight.
Before donating to a particular organization, stop and consider a few warning signs first.
Trinity Foundation has spent several decades examining financial statements of religious organizations. There are common warning signs that show up on these documents that donors should be aware of. Sometimes accounting errors occur, but other times, warning signs may indicate fraud or deeper financial problems. If questions arise when reviewing a church financial statement or ministry Form 990, politely ask the organization’s leadership to address your concerns. Continue reading “Warning Signs When Reviewing Church or Ministry Financial Statements”
Nothing scares the American religious establishment more than the threat of real oversight and real disclosure. Perhaps a history lesson is in order before providing potential solutions.
In 1977, Texas Congressman Charlie Wilson authored a bill, which never passed, that would have required religious organizations soliciting funds to provide documentation for where the money was going.
The events that prompted the bill have long been forgotten but scandals involving the Catholic Pallottine order shocked donors in the 1970s. The Washington Post reported that priests purchased expensive Florida property and provided $54,000 to finance Maryland Governor Marvin Mandel’s divorce.
The Evangelical Council for Financial Accountability (ECFA) was created in 1979 in response to growing political pressure for financial disclosure.
As ECFA’s history relates, “Senator Mark Hatfield addressed a group of key Christian leaders and challenged them to police their own mission agencies as a “Christian Better Business Bureau” or face the potential of government intervention. Consequently, ECFA was formed, standards were established, and a chartering process was initiated for applicant ministries.”
Yet ECFA has done a poor job of policing its own members or slowing down the immense growth of religious financial fraud in the Church.
Former ECFA members Harvest Bible Chapel and Gospel for Asia were accused of misusing donations.
Reports in the International Bulletin of Missionary Research estimate more than $60 billion is embezzled annually by so-called Christian leaders. This amount exceeds what is spent on world missions.
In 2005, Trinity Foundation contacted Dean Zerbe, aide to Senator Charles Grassley, and requested the Senate investigate financial fraud committed by televangelists. In response, Grassley and the Senate Finance Committee requested additional documentation. Trinity Foundation provided investigative reports on over two dozen ministries.
The Senate inquiry went public in 2007, when Grassley’s staff requested financial records from six prominent TV ministries. However, televangelists wanted the IRS to investigate rather than Congress because the IRS is subject to the 1974 Privacy Act and would be required to keep more information confidential. Only a few complied and then even marginally.
In 2011 Grassley’s staff released reports on four of the TV ministries revealing conflicts of interest, self-dealing, and examples of extravagant spending. Trinity Foundation had provided the Senate with 36 investigative reports.
Grassley requested ECFA set up a commission to study areas of abuse identified by his staff and to offer solutions.
Lobbyists and Christian leaders met with Grassley in attempts to thwart the Senate inquiry and arguably succeeded. No subpoenas were ever issued.
ECFA set up a commission but failed to offer solutions to the growing financial fraud. The commission obtained “expert testimony” from televangelists’ attorneys without including the testimony of the televangelists’ critics. A one-sided consensus emerged for no new oversight or legislative remedies to close tax loopholes exploited by televangelists.
The government-sanctioned commission was captured by the very people it should have been holding accountable. Economists and political scientists describe this failure of oversight as regulatory capture.
Trinity Foundation would like to suggest four bold actions.
Take a stand against the prosperity gospel
Imagine Martin Luther attempting to reform the Catholic Church without addressing the evil of indulgences. Such a scenario seems ridiculous, yet that is how ECFA treats the prosperity gospel. ECFA is quietly neutral where it should be most outspoken. ECFA’s Doctrinal Standards never mention the prosperity gospel or related abuses.
At a minimum, ECFA should advise its members to avoid falsely promising that God will enrich people that give to their ministries. Not only is this an abuse of scripture, it is advance-fee fraud. According to the FBI, “An advance fee scheme occurs when the victim pays money to someone in anticipation of receiving something of greater value—such as a loan, contract, investment, or gift—and then receives little or nothing in return.”
Allow Wall Watchers to join ECFA
When Wall Watchers, the parent organization of Ministry Watch, attempted to join ECFA, its membership application was declined. Ministry Watch rates ministries, issues donor alerts, and warns Christians not to donate to organizations that spend donor funds recklessly or without transparency.
After its rejection, Wall Watchers reported on its website, “The denial of Wall Watchers application for ECFA membership was based on a difference in philosophy concerning the rating of ministries, not because Wall Watchers could not meet ECFA’s Standards. The ECFA Board concluded that Wall Watchers’ pursuit of its objectives as a member of the ECFA could create divisiveness within the membership of the ECFA.”
If ECFA intends to get serious about religious financial fraud and excess, it must be welcoming to victims, whistleblowers and Christians that investigate such fraud.
Select a president and board members willing to fight religious fraud
In 2017, ECFA’s board of directors included 15 people. ECFA’s website currently lists 11 board members and officers. Who will replace the board members that have recently left? ECFA should seek out people that are advocates for the victims of religious financial fraud. It is time to give them a real voice, rather than being a voice of the religious establishment.
Why not ask someone like Rusty Leonard to join the board? New perspectives should be welcomed.
Require member organizations to disclose how much key employees are paid
On March 12, 2009, Joyce Meyer Ministries joined ECFA. Joyce Meyer’s compensation should have been disclosed to ECFA during the application process. However, Meyer has never disclosed this amount to her donors. She hides behind a claim of church status to avoid filing a Form 990 which discloses salaries of highest paid non-profit employees.
Was Meyer compensated $2 million per year from her ministry? Possibly. At least one of the televangelists Grassley examined was paid this much.
Senate Finance Committee staffers prepared a memo for Grassley outlining tax loopholes being exploited by religious organizations. The memo also examined excessive compensation. Could the following quote written by Grassley aides be about Joyce Meyer?
“Staff reviewed a compensation study prepared for one of the six churches by a leading compensation consulting firm that also does studies for for-profit organizations. … Taking into consideration the compensation of for-profit CEOs and media personalities like Oprah Winfrey, Britney Spears, Madonna, Rosie O‘Donnell, and David Letterman, and mindful that the minister also receives income from book royalties and consulting fees, the consulting company recommended that the minister‘s total compensation be set at $2 million.”
Is Meyer enriching herself at donor expense? Her donors deserve answers.
Following the Jim Bakker scandal, televangelist D. James Kennedy testified in a Congressional hearing and said, “I would think that if a person is going to give money to something, that they have … a responsibility to learn where it is going.”
How can donors avoid funding lavish lifestyles if they lack salary data and more facts about where the money goes, such as the IRS form 990?
Hey YOU, If you are one of the close to 125,000 people who PAID for the “Christian Prayer Center” to pray for you between 2011 and 2015, PLEASE READ ON. This fraudulent organization has been directed by the Washington State attorney general to give you your money back! However, you have less than 3 months to apply to get your money back.
The trusted magazine, Christianity Today, reported that their whole website and Facebook page was a big fat FAKE, it was a LIE… The sites creator, Benjamon Rogovy pocketed over $7 million dollars. Rogovy also targeted the entire Spanish Speaking world as well with his pay for prayer scam website, Oracion Cristiana.
The testimonials of healings were fake. The impression that they had several pastors on staff to pray for you was a lie. They had none. Please read the Christianity Today article here.