Pastor Duped Into Tax Fraud Scam Pleads Guilty
By Raul Rivera
It was late in the afternoon on a Monday morning in July and Pastor Tom was sweating bullets over the offering on Sunday. "No matter how hard I try to prepare myself, summers are always tough on me", said the pastor. "Attendance is up and down and finances always hit rock bottom . . . God, I need a miracle." He shut off the light in his office and locked up for the day.
Summers can feel heavy on pastors
Being a full-time schoolteacher, Pastor Tom had 10 weeks off in the summer, which he always tried to use as an opportunity to serve the church in more of a full-time capacity than the usual school months enabled. Yet, during these precious summer weeks, it continually seemed that he had more time and plans that the church had finances to support. The drive home was lonely and quiet. There was no radio, praise and worship CD, or prayer. The only volume he could hear was the one created by his own negative thoughts.
From hopelessness to hope
Tuesday morning came really early and Pastor Tom was awake before the sun rose. As he sat down in his den and looked out the window, he aimlessly reminisced about the days that led up to the launch of the new church...until his thoughts were focused on the doubts he was harboring regarding the call to start a church. In what seemed like a minute, he was brought back to reality when he noticed his cell phone's ding reminding him it was time to head to the office. Grabbing his keys, Pastor Tom left without saying goodbye to his wife and headed out of the door. When he arrived in the office there was a voicemail on the church phone from a man who said he wanted to help the church in a big way.
Without delay, Pastor Tom called him back. The man on the other line said he wanted to know if the church had any special needs with which he could be of assistance. Of course, Pastor Tom shared how summers were hard on the church, and that without a miracle next Sunday, they would probably miss the rent payment that was due for August.
The man followed up on Pastor Tom's words by saying, "Well, it seems that I must have heard from the Lord, because I want to give to a great work, and one that has a need. Here is what I want to do. I have a sum of money-up to $20,000.00-that I want to give to your church." Upon hearing those words, Pastor Tom tried to keep his composure as he responded enthusiastically, "That would be a tremendous blessing to our church!" "I need for your church to become our company's consultant and then bill us for it," the man on the other line continued, "Don't worry, you won't actually have to spend any real time consulting; just bill us and we will pay it." Pastor Tom was so excited about the $20,000.00 that he instantly said, "Sign us up!" As the conversation neared its end, the man on the other line told Pastor Tom to just bill him over the next several months and his company would pay the church. "To make it easier, the man offered, "I will come to your office with the invoices already prepared for you."
The church gets its money
Sure enough, just like the man had promised, he came to the church office with several post-dated invoices and a check. "All you have to do is mark it paid and deposit the check," he explained to Pastor Tom. "It's simple," he continued, "Just wait for the funds to clear and then refund us 95% of the invoice in cash." Time revealed that the man was true to his word and the church made $20,000.00. Pastor Tom had to admit; with the church bills paid he sure did feel much better about pastoring.
A couple of years later
"Guilty, Your Honor!" Those words rang throughout the courtroom, as Pastor Tom pled guilty to tax fraud in a plea deal to reduce his sentence to less than one year. The man who was supposedly a "blessing" to the church was sentenced to six years for tax fraud. What happened? What did Pastor Tom do? While we do not know the facts concerning what happened in his heart, we do know that he participated in a tax scam and his church profited from it. The man that perpetrated the scheme was trying to create fraudulent expenses on his business by paying invoices to the church and using them to substantiate an expense that was not real. The church then reimbursed him 95% of the invoice in cash, which he took and used as he pleased. He was able to evade over $200,000.00 in taxes, with Pastor Tom helping him, and Pastor Tom's church profiting from it.
Why these things happen
If you are like most pastors, you probably have entertained thoughts of God pouring out His blessing on your church by miraculously providing thousands-maybe millions-of dollars in ways that are inexplicable by human means. Moreover, you have probably been struggling over the finances of the church and wondering if you will be able to make the budget this month. That tension mixed with a little doubt can punch holes in your character and leave you vulnerable to scammers dressed in sheep's clothing. Let me share with you three reasons why these things happen.
We are particularly vulnerable because we believe in miraculous provision: As I mentioned earlier, there is a tension between miraculous provision and patient anticipation in the midst of unmet budgets. There is a great mystery as to when the Lord chooses to move in our behalf with abundant provision and when He chooses to tell us to wait in anticipation. Because we often live with the expectation of a miraculous provision, the propensity to believe that an otherwise strange proposition is from God is highlighted to the degree that we throw off the discipline of due diligence.
It is easy to be blinded to the details when the bank account is empty: An empty bank account brings a pastor stress like no other. It goes against everything we know and believe about God. It is easy to remember the times that God provided for His people, but hard to accept that in most circumstances He did it when all else seemed hopeless. This is the crucible of every pastor. During this time a pastor must be even more diligent to be patient and not make a decision as a reaction to stress, which usually does not end well.
The feeling of exclusivity is tempting: Let's face it. We all love being a part of something exclusive. Time after time, perpetrators of scams present them as exclusive offers that will soon be closed to the public; they want you to feel you have a short window of time to join. Those who target churches do so on Christian affinity. They invent elaborate stories of how God revealed to them a special secret to investing, or something of the like, that they want to share with you as a way to give back to the Kingdom. The only problem is that the kingdom of which they speak is their own.
A shepherd's call
I have received countless calls from pastors who have entertained propositions that sounded too good to be true. Whether it be through and unsolicited email, and offer to hold cash for a while, or and investment in Iraqi Dinars, a shepherd is to be disciplined in diligence. After all, the life you save may be your own.
How to avoid being scammed
Pastor Tom could have avoided this issue had he set up a church government that provided for better accountability. The church should have a simple, yet powerful, written policy on how income-producing activities are handled. The policy should have the following elements:
1. Who and how an income producing opportunity is approved
2. No private inurement
3. Due diligence and consultation
4. What percentage of excess cash can be invested
Invest in your future
Many pastors across the US that have attended our conferences have received the empowerment needed to best position their churches for success. Protecting your church's assets is more important than ever. I invite you to attend one of our conferences this season. We continually bring to you the latest information. Our conference agenda and manual have been updated for the 2011/2012-tax year. Not only will you get up-to-date information and strategies, you will also receive the newly released "church investment policy".