Fraudster turned fraudbuster turned pastor turns fraudster again: Pleads guilty to stealing from his church

Barry Minkow, pastor of San Diego Community Bible Church (SDCBC) pled guilty to embezzling $3 million from his church. The U.S. Attorney for Southern District of California announced the plea agreement on 1-22-14. You can see the press release here.

Pr. Minkow first went to prison as the mastermind of the ZZZZ Best fraud which collapsed back in 1987. He served under 8 years of a 25 year sentence.

After release he worked at a church in the LA area then became pastor at SDCBC. He started a for-profit company that researched and publicized frauds.

In 2011, he pled guilty to insider trading for reportedly shorting a stock before denouncing the company for alleged irregularities. He drew a five-year sentence for that felony.

That brings us to this week. In the press release announcing a plea agreement, the US AG says

…Minkow admitted to a litany of improper conduct, including opening unauthorized bank accounts on behalf of the SDCBC, forging signatures on SDCBC checks, using funds drawn on legitimate church accounts for his personal benefit, and charging unauthorized personal expenses on church credit cards. In addition, Minkow confessed to diverting SDCBC member donations for his own benefit and embezzling money intended as church donations. In all, Minkow admitted purloining – and concealing from the IRS – at least $3 million from SDCBC’s parishioners and lenders. As described in court documents, Minkow’s conduct continued for over a decade.

 “Over a decade” would put this from somewhere around 2011 back to around 2001. That would be something in the range of 4 years after becoming pastor of SDCBC.

Looks like there are a lot of things here that leaders of churches and nonprofits can learn from.  Things like internal control, separation of duties, authority given to senior pastor, board oversight, time needed to recover from a moral failure. All stuff that is extremely pertinent to leaders in the NPO community.

I’ll see what I can find.

Here’s a few articles out of many articles visible today, if you want a few more details:

• Christianity Today – Fraudbuster Barry Minkow Convicted of Cheating His Own Church Out of $3 Million
• Courthouse News Service – World-Class Sleaze Barry Minkow Guilty Again
• BusinessWeek – Con Man Minkow Convicted. Again. This time for Cheating Church

Update:  Press release says the IRS Criminal Investigation Division was involved. The press release says the plea agreement admitted to $89K of unreported income. Oops. That means there will soon be a bill in the mail for unpaid taxes.