Experts Say Removal of IRS Form 990 Could Help Stop Growing Fraud That is Sucking Billions from Churches Every Year

If members of the Zion Missionary Baptist Church in East Palo Alto, California, hadn’t fought back, their one-time Pastor, Andre Harris, and his wife, Rhona Edgerton-Harris, would have fleeced them of their church building and a home valued at more than $1 million.

Church members explained that when they arrived for services one day in early May 2014, they found a real estate sign on the parsonage next door where the Christian leader and his family had been allowed to live rent free.

A curious church member did some sleuthing at the county recorder’s office and discovered that the deed to the home had been strangely transferred to the pastor and his wife. A for-sale sign also soon appeared on the church property which led alarmed members to demand an explanation from their pastor about a month later.

They protested the sale of the properties which the church’s bylaws prohibit without their consent.

Pastor Harris, who had renamed the church Born Again Christian Center when he took over leadership of the congregation, responded by handing the protesting members notices of ex-communication — barring them from the church in the name of Jesus.

“Greetings in the name of our Lord and Savior Jesus Christ. Born Again Christian Center is informing you because of your inconsistent attendance over the months or years, we have therefore removed you as a member,” Harris wrote in the notice. “You therefore no longer have any rights or privileges to conduct any matter at the said Church. … We are informing you of your removal and permanent ban of membership at Born Again Christian Center.”

The members replied to Harris with a lawsuit alleging several crimes, including attempts to defraud the church. About 10 months later, the church prevailed.

Harris returned the properties to them in a settlement, the terms of which were not disclosed. But Harris almost got away. Zion Missionary Baptist Church members called themselves “blessed” because most perpetrators of fraud in churches are usually never reported.

Research cited by Brotherhood Mutual Insurance Company, the second largest U.S. provider of property and casualty insurance to Christian churches and related ministries, says reported cases of church financial fraud has been rising by about 6 percent annually and is expected to reach the $60 billion mark by 2025.

The level of reported fraud in churches is dwarfed, however, by the 80 percent of church fraud cases that are estimated to go unreported.

John Montague, a corporate and nonprofit tax law expert and senior associate at leading global international law firm Hogan Lovells, explained in a recent interview with The Christian Post why he believes the best way to abate church fraud is to remove the IRS Form 990 exemption churches currently enjoy. Evidence suggests churches cannot be trusted to regulate themselves, he said.

Montague, who is a practicing Christian, also made his case several years ago when he penned a research paper for the Cardozo Law Review, titled The Law and Financial Transparency in Churches: Reconsidering the Form 990.

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SOURCE: Christian Post, Leonardo Blair