AME Zion University Church Targeted in Multi-Million Dollar Fraudulent Scheme | News
An alleged fraud scheme that indebted Zion African Methodist Episcopal Church properties, including in Palo Alto, led to the arrest of a former bishop and lay leader, the U.S. Department of Justice said Tuesday. .
Staccato Powell and Sheila Quintana were arrested and appeared in federal court on Tuesday to face charges of conspiracy, wire fraud and mail fraud stemming from the scheme, which targeted congregations in Palo Alto, Oakland, San Jose and Los Angeles and Private Lenders, U.S. Attorney. Stephanie M. Hinds and FBI Special Agent in Charge Craig D. Fair said in a statement.
Powell, 62, of Wake Forest, North Carolina, and Quintana, 67, of Vallejo, were officers of the Western Episcopal District, Inc., an entity formed by Powell and Quintana in 2016 after Powell was selected as bishop of the Western Episcopal District of the African Methodist Episcopal Zion Church (AME Zion Church), a historically African-American denomination with approximately 1.4 million adherents worldwide tracing its history back to 1796.
A federal indictment filed Jan. 6 and unsealed on Tuesday alleges that Powell and Quintana conspired to defraud AME Zion Church congregations, including AME Zion University in Palo Alto, by rededicating the properties of local congregations on behalf of Western Episcopal District Inc. (WED, Inc.), a straw entity. Prior to the actions of Powell and Quintana, congregations had little or no mortgage debt on their local church properties, which include shrines, residences for pastoral personnel, and other structures used by local congregations for religious purposes. . In some cases, congregations had paid off their mortgages years earlier.
Powell and Quintana used misrepresentations and omissions to force grant deeds from local pastors, claiming that the church’s Book of Discipline, a governing document, allowed Powell to place grant deeds under Western ownership. Episcopal. Pastors who protested were removed from office under pretexts, so a council that met quarterly could not come together to vote or approve mortgage transfers and loans, leaving Powell with absolute control and no oversight, according to a Jan. 14, 2021, lawsuit filed in federal bankruptcy court by Palo Alto’s AME Zion University Church.
Unknown to congregations, he almost immediately began taking out huge loans on the properties, according to the lawsuit, which seeks to prevent Powell and Quintana from succeeding in bankruptcy proceedings that would include church properties.
Struggling with huge debt from private lenders, in which congregations and churches have not received a penny of the money, the scheme began to crumble after the Palo Alto church received a notice of default on one of the loans, according to the civil bankruptcy case.
According to the indictment, after taking control of the church properties, Powell, Quintana and others used the real estate as collateral to secure the high-interest loans, exceeding $14 million. net product. The Palo Alto church alone was more than $3.9 million in debt, according to its lawsuit, which seeks to stop Powell and Quintana from using church assets in their bid to settle the bankruptcy.
Powell and Quintana allegedly misappropriated loan funds for their benefit, including Powell’s acquisition of properties in North Carolina, the end of mortgage debt on Powell’s personal residence in North Carolina, and cash payments to spouse of Quintana. On July 30, 2020, WED Inc. filed for Chapter 11 bankruptcy and listed 11 churches in California, Arizona and Colorado among its assets, according to the Justice Department.
Rev. Kaloma Smith, pastor at AME Zion University, said Tuesday the church has been dealing with the matter for nearly two years.
“We are grateful to the Federal Bureau of Investigation for bringing this case forward. We are grateful that someone heard our cry and began to take action, and we are grateful to the members of the community who knew and supported us. “
Palo Alto law firm Mayer Brown took on the pro bono civil case for the church, he said.
The church community showed resilience and pulled together to overcome the situation, he added. “I am so grateful to our church.”
Powell and Quintana are each charged with one count of conspiracy to commit wire fraud and mail fraud and two counts of wire fraud. Powell is also charged with one count of mail fraud. The maximum legal sentence is 20 years in prison, a fine of up to $250,000 and three years of supervised release from prison, the Justice Department said. Any sentence following a conviction would only be imposed by a court after reviewing US sentencing guidelines and federal law governing sentencing, the department noted, however.
Powell was arrested Tuesday in Wake Forest, North Carolina, and made his first appearance in federal court in the Eastern District of North Carolina. Quintana was also arrested in Vallejo and made her first appearance in Sacramento. The defendants were ordered to make their first appearances in the Northern District of California via Zoom on February 2.
The case is being prosecuted by the Oakland branch of the U.S. Attorney’s Office and is the result of an FBI investigation with assistance from the Santa Clara County District Attorney’s Office.