OAKLAND, Calif. (CN) — Historic African Methodist Episcopal Zion churches went from throwing mortgage burning parties to being saddled with millions of dollars in debt after being coerced into relinquishing their properties in a fraud scheme run by an ex-bishop and his co-conspirator, federal prosecutors said Wednesday.
Appearing by video link before U.S. Magistrate Judge Kandis Westmore, former bishop Staccato Powell pleaded not guilty to four fraud charges stemming from the alleged scheme to line his pockets with the proceeds of loans obtained by using properties owned by congregations throughout California as collateral.
Powell, 62, allegedly conspired with lay leader Sheila Quintana, 67, to secure grant deeds from local pastors to take out new mortgages on properties with mortgages that had long been paid off or had little mortgage debt. The properties housed sanctuaries, staff residences and other structures used for religious purposes.
The properties were re-deeded in the name of Western Episcopal District, Inc., an entity Powell and Quintana created in 2016 after Powell was selected as bishop of the Western Episcopal District of the AME Zion Church.
Assistant U.S. Attorney Jonathan Lee said Powell and Quintana "informed pastors that they would be re-titling their congregations into this corporate entity and pressured the pastors to comply including threatening them with removal from their positions if they didn’t comply. Defendants Powell and Quintana used the properties as collateral for hard money loans which was over $25 million. Some of the proceeds were disbursed to defendants to line their own pockets or pockets of their family members.”
He added, "Very little went back to the congregations that now bear the brunt of the heavy encumbrances imposed by this scheme. Many had had mortgage burning ceremonies to celebrate that they owned their property free and clear. These same congregations now owe millions of dollars. The loss afflicted on the affected congregations is incalculable.”
The pair allegedly targeted congregations in Oakland, San Jose, Palo Alto and Los Angeles where the historic churches played a vital role in community life and the civil rights movement. The San Jose branch of the AME Zion Church, for instance, was founded in 1864 and organized the local chapters of the National Association for the Advancement of Colored People and the Congress of Racial Equality.
Powell headed congregations throughout the western U.S. before he was suspended and disrobed in 2021 following a church trial that found him guilty of mishandling millions of dollars.
Powell and Quintana were arrested last week; he in in Wake Forest, North Carolina, she in Vallejo, California. Both are charged with one count of conspiracy to commit wire fraud and mail fraud and two counts each of wire fraud. Powell is also charged with one count of mail fraud. Each count carries a maximum sentence of 20 years in prison.
Quintana also served as principal of Vallejo High School from 2016 to 2019, when the Vallejo school district decided not to renew her contract.
She appeared before Westmore by video from her home in Vallejo on Wednesday but did not enter a plea because she had not yet retained counsel. Her arraignment was held over until Friday.
The pair are currently out of custody on respective bonds of $50,000. They are also restricted from opening new lines of credit, acting as fiduciaries or soliciting for money.
Westmore said the charges “are very serious” but she believes the bonds to be “sufficient to mitigate the risk of flight and danger to community.”
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