Church Doctrine! Come On Eddie, I Just Want To See If You Obey The Law! Grassley Spurned By Eddie Long And Others

Well, the deadline came and went and only two of the six ministries provided the data that Senator Charles Grassley (R, Iowa) requested. Joyce Meyer, of Missouri, complied as did Kenneth and Gloria Copeland, of Texas. Atlanta ministers Rev. Creflo Dollar (World Changers Church International) and Eddie Long (New Birth Missionary Baptist Church) failed to provide the financial information Sen. Grassley requested. Both, through their attorneys, said that Senator Grassley had crossed the line and was not entitled to the information.

According to writer Christopher Quinn of the Atlanta Journal Constitution:

Attorneys for Dollar and Long sent letters in response.

The letter from Dollar’s attorney expresses concern about giving documents to the government, explaining such action could trample on the constitutional rights of people to practice religious beliefs without government interference.

The letter says the six ministries targeted preach the “…’Prosperity Gospel,’ a deeply held religious belief that God’s devout followers and earthly leaders will prosper and be successful in all they do, including in financial matters, as the outward expression of his favor.”

It went on to say, “… we believe that the religious doctrine and practices of a church should not be held out for the world to evaluate as a result of responding to Congressional inquiries.”

It says Grassley should get a subpoena or to refer his request for a review to the Internal Revenue Service.

A written response from Long’s attorney says Grassley’s request is informal, and that it “clearly disregards the privacy protections of the Church under law and appears to cross the line of Constitutional guarantees for churches.”

Mac Hunter, of Atlanta’s Morris, Manning & Martin office, said by phone he believes the letter is a sufficient reply to Grassley’s request.

It’s seems to be an interesting position to take - privacy? Privacy for financial documents that are easily obtained by the IRS? Perhaps I’m missing something (feel free to share with your comments), but if the IRS can get the data, aren’t the folks who refuse to comply bringing on a world of trouble for themselves and the ministries they represent?

Not once in Grassley’s request was there any indication of doctrine or issues with belief. Rather, Grassley’s requests were specific related to financial details of the ministries and how that related to the ministers. Grassley issued a statement:

“I have an obligation to protect the integrity of U.S. tax laws,” Grassley said in a written statement. “If tax-exempt organizations, including media-based ministries, thumb their noses at the laws governing their preferential tax treatment, the American public, their contributors and the Internal Revenue Service have a right to know. Considering tax-exempt media-based ministries today are a billion-dollar industry with minimal transparency, it would be irresponsible not to examine this tax-exempt part of our economy.”

Some questions to consider:

• If you have nothing to hide, why not comply?
• If the IRS has the right to audit or investigate, why not comply?
• The issue that Grassley has at the core of his investigation is undue enrichment from the ministry, if you believe that God has blessed and, as a minister, you have not been unduly enriched, why not comply?

Every choice has a consequence. As an ethics speaker, I know, as I’ve suffered the consequences of poor choices. Perhaps those who lead their flocks will “render unto Caesar, what is Caesar’s” and comply. Perhaps, it’s just me, but if the same were asked of Billy Graham, I would bet compliance would be swift knowing that he had nothing to hide.

Comments are welcome!

Mortgage Fraud - From NY to Texas to Tennessee - Business Ethics Speaker Chuck Gallagher Reviews the Week

It’s all over…every where you turn, mortgage fraud and other fraudulent schemes seem to be uncovered. Let’s look at a few of the cases that caught my attention in this week in review.

In a Manhattan federal court six individuals were charged with a “home foreclosure rescue” scheme which defrauded homeowners of their homes and lenders of millions of dollars in bad loans.

“The defendants charged today perpetrated a multimillion dollar fraud in which they profited by preying on the most vulnerable of homeowners,” said United States Attorney Michael J. Garcia. “While promising rescue from foreclosure, they instead stole their victims’ homes and millions of dollars in loans secured by their victims’ properties.”

“This case is yet another example of the pervasive fraud we have found in the mortgage industry,” said Attorney General Andrew Cuomo. “My office investigated the scheme charged in this case in response to complaints from individuals who had been victimized and lost their homes. I applaud U.S. Attorney Garcia and his prosecution team for their excellent work and look forward to more productive partnerships with the Southern District of New York.”

“The rise in mortgage defaults associated with sub-prime mortgage lending has created a target-rich environment for so-called foreclosure rescue schemes,” said FBI Assistant Director-in-Charge Mark J. Mershon. “We will continue to root out the predatory practices of those who would victimize distressed homeowners and unwitting lenders for a fast and easy (and illegal) buck.”

Same week, we find in Houston, TX - 37 individuals charged with mortgage fraud.

According to the Associated Press:

The charges, contained in indictments unsealed Thursday, follow a yearslong investigation by the Harris County District Attorney’s Office and the U.S. Secret Service. Police said 12 of the suspects have been jailed.

The scheme involved players including buyers, mortgage brokers and construction company owners. It’s similar to other scams uncovered in Harris County recently, said Lester Blizzard, assistant district attorney.

Then in Tennessee a woman pleads guilty to a fraud scheme where she provided fraudulent data to obtain a mortgage loan. Her guilty plea relates to bankruptcy fraud, money laundering, fraudulent use of a social security number, and identity theft.

According to the mortgage fraud blog:

At the plea hearing House admitted to providing false and fictitious statements and information to obtain mortgage loan financing to purchase 523 Tribal Land Cove, Collierville, Tennessee in 2001. The fraudulent items included a false social security number, fictitious employment income, and omitted a bankruptcy declaration. House admitted to filing a bankruptcy petition in 2003, to maintain possession of the Tribal Land Cove property and to conceal the scheme. House also admitted to providing false and fictitious statements and information to obtain mortgage loans to finance the purchase of 664 Ridge Springs, Collierville, Tennessee in 2005; and, to engaging in financial transactions with the proceeds obtained through that scheme.

The three components of most any fraud are: (1) need; (2) opportunity and (3) rationalization. As a business ethics speaker I know first hand the components and the consequences of an ethics violation.

In all three of the cased listed above there are several common threads. First, at least in two of the cases, greed and misdirection allowed “straw purchasers” to facilitate the fraud. These people, who have now had their credit ruined, likely sought better than average returns and fell prey to bogus fraudulent presentations. The “unsuspecting” participant (victim) felt they had a need and this “investment” provided an opportunity. Higher than average returns justified the risk (their rationalization).

Opportunity comes in many forms. It appears that, in the rush for increased business, lenders were less than vigilant about documentation. Perhaps internal controls weren’t there or perhaps they weren’t wanted - as often internal controls are perceived as anti-sales and anti-growth. Yet, lack of proper controls create the environment for “opportunity” and thereby aid in the advancement of the fraud.

From coast to coast as I speak to groups on business ethics, I find that simple procedures and processes could have prevented most frauds or at least not allowed them to go undetected.

As we are seemingly in the throws of a housing slow down or “recession” many say - it was predictable. Regardless of industry, when things are operating at a frenzied pace and money (lending in this case) seems easy - maybe even too good to be true - one can expect problems. Mortgage fraud isn’t new, but in the environment we have just passed through, I think we’ll see more of this for some time to come.

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Comments are welcome!

Mortgage Fraud - Life In Prison - Business Ethics Pro Chuck Gallagher Asks - Is It Worth It?

Assistant District Attorney for Harris County Texas (Houston) said, “We don’t want Houston to become the foreclosure capital of the world.” Yet, his office charged 37 people with an alleged scam to commit mortgage fraud - a fraud worth $5.6 million authorities state.

According to a report from the Associated Press:

The charges, contained in indictments unsealed Thursday, follow a yearslong investigation by the Harris County District Attorney’s Office and the U.S. Secret Service. Police said 12 of the suspects have been jailed.

The scheme involved players including buyers, mortgage brokers and construction company owners. It’s similar to other scams uncovered in Harris County recently, said Lester Blizzard, assistant district attorney.

The alleged ringleaders, Obbie Toliver Sr. and Joyce Toliver, were being held without bail in the Harris County jail. They are charged with theft, money laundering and organized crime, Blizzard said.

The Tolivers, a married couple with at least one child, used three businesses over the past several years to submit false loan documents, artificially inflate appraisal values and launder money, according to an affidavit attached to a warrant to search the Tolivers’ home. The businesses named in the warrant were Magic Processing, Magic Financial Services of Houston and Your Processing Center.

Well…these folks were from Houston and if proven guilty won’t be spending much time enjoying the fruits of their labor. In fact, many people who unknowingly fell prey to their scheme will suffer long term consequences. In the case above, the Tolivers used straw buyers with a good credit score to effect their fraud. Again according to the Associate Press:

Officials said the scheme involved a recruiter finding a “straw man” with a good credit score who agrees to buy a house as an investment. The buyer is told he’s getting involved in a real estate investment in which the house will be resold at a profit or leased on a rent-to-own basis.

The recruiter, colluding with others in the scheme, gets the house appraised at an artificially high value. He then gets the loan approved using fraudulent documents overestimating the straw buyer’s income, officials said.

When the home purchase is closed, the straw buyer is paid off for the use of their credit. The other parties also take their cut, with the recruiter taking the most.

After the house sits vacant for months with no one paying the mortgage, the bank forecloses and the straw buyer’s credit is ruined, officials said.

Every choice has a consequence. As a business ethics speaker, I talk with groups around the country on that very fact…outlining the truth about consequences. There are certain facts that seem to follow most of the frauds I see:

• There are three things that generally become part of a fraud: Need - Opportunity - Rationalization
• Most times when a fraud is perpetrated, if there is no immediate consequence (like getting caught) it will esclate
• The short term benefits from the fraud (especially if financial) can be quite addictive and lead one to want more
• There is always a day when one must face the consequences of one’s actions

Likely the most significant outcome is - the consequence is far greater (especially is the consequence relates to prison) than any enjoyment that might have been gained from the fraud.

The Tolivers, if convicted, will perhaps spend the rest of their lives in prison, they will not have the joy of rearing their child, they will not have the pleasure of spending their married lives together, and they will leave a shattered legacy of fraud behind them that will likely overshadow any prior good that they might have accomplished.

As a business ethics speaker, I ask folks often - is the price you might pay for a fraud committed worth it? Having been there myself…and speaking for myself…the answer is a resounding - NO!

Your thoughts?

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