Anthony and Harriet Jinwright were co-pastors of Greater Salem Church, a venerable institution in Charlotte, NC, that was founded by freed slaves in 1857 as Salem Baptist Church. According to some accounts, the Jinwright’s extravagant lifestyle fueled by a cult-like management structure drove the church into bankruptcy. That is not why they are in prison, though. As a matter of fact, the judge that sentenced them considered ordering restitution to the church, but rejected it, because the church did not consider itself a victim. They are in prison for conspiracy to defraud the United States and tax evasion. The Fourth Circuit has turned down their appeal, so they will be there for quite a while longer and the seven figure restitution to the United States is probably more than they will ever be able to pay.
My peculiar reading habits are responsible for sometimes picking up on stories that are mostly old news. The Fourth Circuit decision published a little over a week ago was the first I learned of this one. The trial and sentencing of the Jinwrights in December 2010 received extensive local coverage. Rhianon Fion-Bowman did a piece in the Charlotte Magazine titled Bully at the Pulpit that tells the story quite well. Jack Townsend in his Federal Tax Crimes blog analyzes the legal issue in the appeal. So what is there for me to add ?
The Jinwright’s lawyer, at the outset of the case indicated that the extravagant lifestyle was not relevant. As he put it, driving a nice car is not a crime. His final defense, though, was that there was not a crime. It was just a misunderstanding about the tax laws:
“The kingdom of God is not run on generally accepted accounting principals ,” Hinson said during closing arguments. “Thank God. If it were, we’d all be in trouble. Neither Bishop (Jinwright) nor the church got these technical things right…(but) that does not make him a criminal.”
It would be quibbling to point out that income tax is not determined by generally accepted accounting principles either. The main “technical thing” was whether “love offerings” to the pastors were taxable income or excludable as gifts.
The big weakness in the misunderstanding defense was the reluctant testimony of Robert Howze. Mr. Howze is both a minister and a CPA and he views his work as a CPA for churches as a form of ministry, denoting himself, The Pastors CPA. I have not studied his material, but from an overview, I suspect it is much like the excellent material on church governance and financial control put out by the Evangelical Council for Financial Accountability. Mr. Howze had been called in to help Greater Salem gain formal recognition as a 501(c)(3) organization so that it could apply for grants. I should note that Greater Salem could operate as a 501(c)(3) without formal recognition on two grounds. It was formed before 1969 and it is a church. That doesn’t help you with conservative funders, though. They are going to want that letter from the IRS
The quest for formal recognition was stymied by the high level of compensation to Bishop Jinwright as recorded by the church, which as it turns out was not his entire compensation. Mr. Howze audited the church for two years and issued management letters raising concerns about compensation issues. He declined the engagement for a third year as he explained at the trial:
“When you elected not to go back to Greater Salem Church to conduct a third audit, what was your conclusion about Mr. Jinwright’s willingness to get it right?”
The witness grew fidgety. He gazed down toward his lap. He rubbed his eyes. The jury and gallery sat motionless, all eyes fixed on Howze.“That the ministry either didn’t have the capacity or the willingness to make the changes,” he said at length.
Ironically at his sentencing hearing, Bishop Jinwright told the judge that he wanted to travel the country warning other pastors about the need to hire qualified bookkeepers and accountants and of the need to follow their suggestions and tax law. Who knows ? Maybe they would listen to him better than he listened to Mr. Howze. They are going to have to wait a few years though.
You can follow me on twitter @peterreillycpa.
Originally published on Forbes.com on July 1st, 2012